We know that saving money should be on everyone’s list of financial priorities, yet not many of us are actually saving money. The national personal savings rate as a percentage of disposable income in March 2013 was only 2.7%, according to the U.S. Department of Commerce Bureau of Economic Analysis. That means Americans only saved $2.70 for every $100 of disposable, or after tax, income. If you have big goals to reach, you may have to commit to saving more than a few dollars each month.

Retirement

Retirement age is generally in your early to mid-60’s, but many people are continuing to work full-time past that age because they haven’t set aside enough money to completely stop working. Your health and life expectancy may allow you to keep working longer than the historical retirement age. However, you’d want the opportunity to stop if you can. That will require you to set aside money when you’re young.

Because of compounding interest (earning interest on interest you’ve already been paid), it’s much easier to reach your retirement savings goals when you start early. The longer you wait to start saving for retirement, the harder it is to build your savings large enough to retire comfortably.

A rainy day

Broken appliances, major car repairs, medical bills can all come without notice and may require a substantial outlay of cash. It’s much easier to cover these types of emergency expenses when you have the money in a savings account (one that’s not your retirement account.) You won’t have to run up a big credit card balance and you won’t have to spend months trying to pay off the balance.

A house down payment

These days, it’s not so easy to get a mortgage without paying money down. While the ideal mortgage down payment is 20% or more, there are some mortgages that allow you to pay 3% down. Remember, the more you can put down, the more equity you have in your home and with a 20% down payment you can typically avoid private mortgage insurance and ultimately have a lower monthly housing cost.

Your kid’s college education

Student loan debt is at record highs and college tuition continues to rise. Like retirement savings, college education savings has the opportunity to grow and earn interest if you start early, contribute regularly, and choose a savings vehicle with a good interest rate. Save as much as you can, even if it’s not enough to completely cover your child’s college education, it will significantly reduce the amount of loans you’ll have to borrow.

Travel

If annual vacations are a permanent fixture on your to-do list, then saving for these vacations is necessary. You may think, “Why bother saving when I can put the trip on a credit card?” Saving up for a vacation, rather than charging your travel expenses, keeps you out of debt. You can benefit from using a rewards credit card to fund the vacation, but use your vacation savings to pay off the balance pronto. That way, you won’t negate the travel rewards you’ve earned by paying interest on the credit card balance.

New stuff

Our most-used technology needs replacing every few years. Computers, tablets, smartphones, cameras, etc. can get outdated rather quickly. New gadgets are being released. You may want to purchase a new television. Sure, you can finance these things with in-store credit or put them on your credit card, but again, to avoid debt it’s much better to pay cash. Consider having a savings account that’s solely for the purchase of new stuff: new clothes, furniture, redecorating, etc.

It’s a good idea to save up for any future expense that you can’t afford to pay for out of pocket. Think about what things are coming up in the future, both near and far, and set aside money from each paycheck so you’ll be able to afford big expenses with ease.