How Much Do You Need to Save for Life’s Major Financial Milestones?

Building financial security requires more than just good intentions. It demands concrete savings goals and a clear roadmap. Whether you’re eyeing a new car, planning for your child’s college expenses, dreaming of homeownership, or building a safety net, understanding how much to save is the crucial first step toward achieving these milestones.

Before pursuing any major purchase, your first big financial goal should be to build an emergency fund. Everyone faces unexpected expenses from time to time, and an emergency fund can prepare you to face those without derailing your other financial goals.

A good rule of thumb is to aim to save three to six months’ worth of living expenses. For someone with $3,000 in monthly expenses, this translates to $9,000 to $18,000 in total. If your job is less stable or you’re self-employed, aim for the higher end of this range. This cushion can help protect you from unexpected medical bills, car repairs, sudden job loss, or other financial surprises.

The cost of a reliable vehicle varies dramatically depending on whether you’re buying new or used. In 2025, the average cost of a new car is more than $50,000¹. The average cost of a used car is about $25,000².

If you don’t plan to save enough to purchase a car in cash, the standard recommended down payment is 20%³. That means you’ll need to save approximately $5,000 for a $25,000 used car, plus another $1,000 to $2,000 for taxes, registration, and insurance deposits.

Early planning is essential in planning for college. The average cost for a student at a public in-state university currently costs an average of $27,146 per year, and almost $110,000 for four years. Private institutions can cost more than double that amount⁴.

For a child born today, saving $300 to $500 monthly in a tax-advantaged 529 plan could accumulate $80,000 to $130,000 by age 18, assuming modest investment returns. Many families aim to cover a portion of total costs through savings, with the remainder coming from financial aid, scholarships, and student loans.

For many people, buying a home remains a cornerstone of the American dream, but it can require substantial upfront capital. Some home loans allow down payments as low as 3% of the cost of the home, but a down payment of 20% helps you avoid private mortgage insurance and secures better interest rates.

On a $350,000 home, a 20% down payment budgets $70,000, versus a 3% down payment of $10,500. You’ll also need to budget 2% to 5% of the purchase price for closing costs, another $7,000 to $17,500. Some programs are available to help qualifying first-time homebuyers with those costs.

To achieve these savings targets, you’ll need discipline and the right tools. Start by automating your savings by setting up automatic recurring transfers from checking to savings accounts every payday. The mentality of paying yourself first ensures that saving happens before discretionary spending.

Consider opening a high-yield savings account for goals you’re pursuing within the next one to three years. These accounts offer interest rates that significantly outpace traditional savings accounts while keeping your money accessible for emergencies or upcoming purchases. By saving in a high-yield savings account, you get a higher interest rate, in addition to the compounding power of that higher rate.

For longer-term goals, certificates of deposit (CDs) can offer even higher rates in exchange for locking up your money for a specified period, typically ranging from three months to five years. CDs work well for college savings or a house down payment when you have a defined timeline. You might create a CD ladder—purchasing multiple CDs with staggered maturity dates—to maintain some liquidity while maximizing returns.

The path to financial security isn’t built overnight. By setting clear goals and timeframes, paired with appropriate savings strategies, you can transform these ambitious goals into achievable realities. Start today, and your future self will thank you.

Disclaimer: This article is for general information and education only. It should not be considered financial or tax advice.

¹ _{https://mediaroom.kbb.com/2025-10-13-Kelley-Blue-Book-Report-New-Vehicle-Average-Transaction-Price-Hits-Record-High-in-September,-Surges-Past-50,000-for-the-First-Time-Ever}
² _{https://www.kbb.com/car-news/average-used-car-price-rises-slightly/}
³ _{https://www.bankrate.com/loans/auto-loans/car-loan-down-payment-benefits/}
⁴ _{https://educationdata.org/average-cost-of-college}