How to use savings buckets to achieve your lifestyle goals

Aligning your savings strategy with your personal priorities will help you make smarter money decisions and achieve your financial aspirations faster.

You likely know you should be saving for the future. But how do you figure out exactly what you’re saving for, how much to set aside and where to put it all? 

Linda Wu, Senior Vice President, product lead for consumer deposits at U.S. Bank, suggests looking inward to help you answer these questions: “Look closely at your personal priorities when it comes to saving money,” she says.

For example, in a 2024 survey, 46 percent of millennials aged 25 to 44 said their top life goal is attaining financial independence. Other leading lifestyle goals included owning a home (47 percent), traveling (39 percent), having a long and healthy retirement (38 percent), and building a family (27 percent).

Once you identify your priorities and values, you can build a savings plan that aligns with your lifestyle, ensuring it supports both your current needs and future goals. 

What are savings buckets?

Savings buckets are a goal-oriented method for saving your money, helping you break down financial objectives into manageable pieces. Instead of saving for everything in one lump sum, you can create separate “buckets” for each of your financial goals.

The beauty of this approach is that it allows you to allocate your money based on the specific priorities you have and the timeline for achieving them. For example, you might direct a larger portion of your savings into a bucket dedicated to buying a home in the next few years, while contributing a smaller amount to a longer-term goal like retirement.

This system also gives you the flexibility to adjust as life evolves. If a goal needs to be prioritized due to a sudden change in circumstances, you can easily shift funds between buckets. 

Types of savings buckets

Everyone’s financial goals are unique, which means there’s no one-size-fits-all approach to savings. However, here are four common categories to consider:

• Emergency savings. No matter your income, age or stage in life, you should have money set aside for a potential financial emergency. If you’re starting from scratch, many experts recommend aiming to set aside $1,000 in emergency savings, with an eventual goal of stashing up to six months’ worth of expenses.
• Short-term savings. This kind of savings bucket allows you to plan for goals you hope to achieve within the next one to three years, such as vacation, wedding, new car, new furniture or appliances, and adopting a pet.
• Medium-term savings. Some savings goals may take three to 10 years to reach, including a down payment for a house, starting a family, paying for college, doing a home renovation and taking a bucket-list trip.
• Long-term savings. This is for goals that may take more than 10 years to reach, such as retirement, purchasing a vacation home, starting a business and making a sizable charitable donation.

Products and tools for your savings buckets

One of the key advantages of using this bucket strategy is that it allows you to select the right financial products and tools for each specific goal. Whether saving for a short-term need or a long-term financial milestone, a variety of options are available to help you reach your targets efficiently.

• Savings account. A high-yield savings account, such as the U.S. Bank Smartly Savings account, offers competitive interest rates and easy access to your funds. This is an ideal option for short-term goals where you want your savings to grow without locking them away. Plus, you can transfer money electronically, making it convenient to manage your savings.
• Certificate of deposit (CD) and money market account (MMA). A CD is a great option for long-term savings. (It usually offers higher interest rates, but there is often a penalty for withdrawing your money before the CD’s specified term expires.) MMAs typically have a higher interest rate than traditional savings accounts but may also have higher minimum balance requirements. Not sure which option is the best for you? Check out this first-timer’s guide to savings account alternatives to learn more.
• Automatic transfers. “Do you have a busy social lifestyle? If you don’t have a lot of time and want to route your money into a savings account at fixed intervals, set up auto-transfers,” says Wu. These recurring transfers can coincide with your paycheck or with debit or credit card purchases.
• Manual transfers. “If you prefer seeing money go from one account to another when needed, make manual transfers,” says Wu. This approach is also a great option for capturing extra income, like bonuses or tax refunds, and putting it toward your savings goals.

Apps and digital banking

Mobile apps and digital banking can also help you manage your savings buckets. They offer an easy, on-the-go way to keep track of your goals, monitor your progress and ensure your savings strategy stays on course.

U.S. Bank’s mobile app, for example, has several features that allow you to track your goals and track your spending. It also has a smart assistant to help you along the way.