Whether you’re saving for retirement, a down payment or just starting a savings account, setting financial goals early will help grow your money faster. It will also help you get into the habit of saving money. Use these tips to learn about setting financial goals now, and how to get started right away.

Setting Financial Goals Now

Though there are many reasons to set your financial goals early, some goals are more pressing than others. Down payments and emergency savings are important, but saving for retirement is vital. The earlier you start saving for retirement the more secure your future will be.

Whatever your financial goals may be, by starting today, you’ll accumulate more savings by the time you need it. Take advantage of compounding to earn interest on interest, so that money invested now will have more time to grow over time.

Many financial institutions, including Discover Bank, offer high yield savings accounts — savings accounts with relatively high annual yields. To better understand your options, compare savings account rates among some of the major banking institutions.

Do You Have an Emergency Fund?

An emergency fund is an important financial goal for everyone. You never know what unexpected costs you could face, whether it’s unforeseen medical costs, loss of a job or even unexpected car repairs. A common financial rule of thumb is to have an emergency fund equal to at least three months of your after-tax expenses.

If your current budget can’t accommodate extra saving, take a realistic look at your existing expenses and identify which ones could be reduced, even a little. Setting aside just $40 a week adds up to more than $2,000 per year.

Consider saving for your emergency fund as a non-negotiable expense. Collect a set weekly amount in a high interest savings account.

Paying off Debt Is a Common Short-Term Financial Goal

Short-term financial goals often involve paying off loans, credit lines or credit card debt.

To begin paying down your debt, one option is to make larger payments on the accounts that carry the highest interest rates, while still making the minimum payment on your other loans. This will potentially provide greater cost savings over time, as you will pay down the high-interest loan faster.

Another popular strategy is the “snowball method.” This means paying extra toward your smallest debts/loans, while making the minimum payments on your larger debts. As you pay off your smaller debts over time, you will have fewer monthly minimum payments to make, and eventually you can put more money toward the larger debts. Other methods of short-term debt repayment include getting a consolidation loan with a lower interest rate, or utilizing a balance transfer to a low or 0% interest rate credit card.

Life Changes, and Your Financial Goals Will, Too

Financial goals that you set today may not have the same importance for you in 10 years. For example, you may have more kids, experience a job change, have health problems or inherit money from a family member. As your life changes, expect to adapt your financial goals to your new situation. Review both your goals and your progress toward them approximately every six months, and assess changes you may need to make.

No matter what your current financial situation looks like, you should always be setting financial goals to help guide your decision-making and influence your behavior. Whether you want to save for a down payment, pay down your debt or focus on your retirement savings, don’t wait to get started. Start setting financial goals today — you can always revise them down the road.

Discover Bank, Member FDIC

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