Saving money gives us the opportunity to purchase items without accumulating debt as well as creating a cushion when unexpected expenses arise. Over the last decade the savings habits of Americans has been on a decline, even plummeting into negative numbers in recent years. For many, saving money may seem impossible. However, when you take the time to carefully plan your spending and saving you may find that you are in a better position to save than you thought.
Thinking about your financial future, short or long-term, can cause anxiety for even the most savings-oriented person. One way to help alleviate some of this anxiety is to establish financial goals. Doing so can help provide a clear sense of direction, as well as the motivation to save.
Identify your short, intermediate, and long-term goals. Make them as specific as possible, including the total amount you need to save and the date you’ll need to have the money by.
Does the word budget make you cringe? You’re not alone. Forget about the “B” word and start calling it a savings plan instead.
Setting up automatic deposits from your paycheck or checking account into your savings account each month may help curb the tendency to spend the money. Most employers allow you to deposit a portion of your paycheck into more than one account. If you can’t do that, set up recurring automatic transfers with your financial institution.
Some savings accounts, such as Money Market accounts and CDs (Certificates of Deposit), pay higher interest than a basic savings account. This is due to higher minimum balances and/or a promise to keep the money in the account for a specified amount of time (as with a CD).
Money Markets are considered “liquid” accounts. These are accounts where you can make withdrawals without incurring any penalty. With a Money Market there is usually a minimum balance requirement that you must maintain to avoid a fee. You also need to keep in mind that Federal regulations generally limit the number of withdrawals to six per month.
CDs also have a minimum balance requirement but these are not liquid accounts. You choose the length of the CD (usually anywhere from 3 months to 5 years) and promise to keep the funds in that account for the duration of the term. Withdrawals made prior to the maturity date are subject to penalties so these accounts are better for those who will not need to access the funds on deposit for the length of the term.
Click here for our savings account guide.
"Before you spend one dime of your paycheck, take your cut, right off the top. No questions. No excuses. You are the most important creditor you have."
Learn More