Savings strategies for different goals
By Steve Santiago • Bankrate.com

The economy may be slowly limping back to life, but many American families still find it difficult to sock money away for traditional middle-class trappings such as a new car, college or retirement

Belt-tightening is always a good way to save money, but you can take it only so far because when you're raising a family, reasons to spend pop up like weeds. And they come in many varieties, such as car repairs, unreimbursed medical bills and unexpected household repairs, to name a few.

U.S. households saved 5.7 percent of disposable income in April 2009 -- a lot better than 0.4 percent in 2005 but way off highs of more than 10 percent in the mid-1970s.

But the national savings rate isn't as important as your personal savings rate. Elizabeth Warren and daughter Amelia Warren Tyagi, co-authors of "All Your Worth: The Ultimate Lifetime Money Plan," advocate this financial formula for success: Spend 50 percent of your paycheck on the "must-haves," 30 percent on "wants," and use the remaining 20 percent to service debt and save money.

"We've grown so accustomed to spending money that it really is time to take a second look at our budgets and start pulling in the reins a little bit," says Certified Financial Planner Kelly Campbell, principal at Campbell Wealth Management in Fairfax, Va. "What we'll find out is that a lot of people are able to save a lot more money than they ever thought."

So how do you squeeze more money out of an already squeezed family budget? It's a matter of determination and discipline.

Saving for different goals Set up an emergency fund Save for short-term goals Establish midterm goals Don't overlook long-term goals

1. Set up an emergency fund Most financial experts recommend that you set aside an emergency fund of three months' to six months' worth of living expenses before you start saving for other goals. While this money technically does not go toward any of your short-, medium- or long-term savings goals, it does act as a deterrent to tapping important accounts such as a 401(k) if you lose your job. The money also helps prevent your family from getting into deep credit card debt. If both spouses are working and jobs are secure, you could adjust how much you save for emergencies. But you'll need to assess your situation carefully. The amount you need to save "depends on how long you expect to be looking for work," says Certified Financial Planner Judith Ward, senior financial planner with T. Rowe Price in Owings Mills, Md. "Households with just one worker or folks who earn commission may want a little more just because of that uncertainty." Bankrate's work sheet can help you determine how much you need to save in an emergency fund. Ward also suggests tracking family expenses by adopting a household budget for the best chance of success in meeting your savings goals.