Saving money is a key principle to successfully living life. Those who elect to save on a regular basis are those who will achieve success throughout their lives. It all starts with opening a savings account with a bank or a credit union. This account will make it easier to set aside money on a regular basis. You may then utilize those funds for specific life events and to prepare for unplanned events and/or emergencies. In this comprehensive guide, we will outline money saving strategies that will lend to your being able to live a financially-balanced life.
Many Benefits Abound
Most individuals know and understand the importance of saving a portion of the income that they receive; however, not many understand all of the benefits associated with taking this step.
Saving is one of the most important of all habits.
Saving assists in covering future expenses, managing your day-to-day finances, planning for life events, handling financial emergencies, and overcoming financial stress. Below are three ways in which saving money can help you thrive in an economically-challenging world:
- Paying for Life Goals – By saving money, you will have funds available for the life goals that you have. This may include purchasing a new car, buying a home, or even pursuing more education. You should list the life goals that you have and then outline a saving strategy to achieve those goals.
- Employment Flexibility – By saving money, you will find that you have a safety net of financial support in gaps that occur with employment. These may include taking time off due to mental or physical health complications, family emergency, schooling, or issues where you are laid off or fired. In addition to this, saving allows you a cushion if you want to take classes to advance your career or would like to switch to a different job or a career.
- Hardship Assistance – A significant aspect of savings is to develop an emergency savings fund. This will help ensure that you are able to face various expenses in the event of unexpected life events. Examples include natural disasters, unemployment, the need to make repairs to a vehicle and/or a home, and/or medical issues that arise. By having a savings account set up and money in it, you will find that you are better able to ease through the hardships that are known to occur throughout life.
Savings Accounts for Specific Purposes
The first step to saving is to determine what you are saving for. When you figure that out, you may then set up savings accounts for specific purposes. There are many free savings accounts offered in today’s world to make this easier. In addition to this, standard savings accounts offered by banks typically just require a small minimum deposit and a small minimum balance.
If you do not maintain a minimum balance, you may have to pay a small monthly fee.
For example, here at Somerville Bank, you may obtain a savings account with a $100 minimum deposit. If you maintain a $100 minimum balance each month, you will not have to pay a service fee. If you do not maintain this balance, you will just need to pay a small service fee of $2.50.
The following outlines the various types of savings accounts that you may set up for yourself:
- Property and Income Tax Account
- Vehicle Repairs
- Home Repairs
- Employment Savings
- Emergency Fund
- Home Purchase
- Vehicle Purchase
- Vacation
- Medical
Of course, you may combine these accounts into one. You may come up with some other type of savings account. The choice is yours.
Once you have your account or accounts set up, come up with a percentage of your income that you will designate to each. For example, if you make $1,000 a week, you may elect to donate 10% to each savings account. Let’s say you have one account for home expenses, one for educational expenses, and one for medical expenses. You would take $100 and put it in each account for a total of $300.00.
Do not fret if you are unable to put back a large percentage of your income into your savings account or accounts. By consistently adding to the account and the compounding of the associated interest with the account, you will quickly find the money accumulates quickly.
Start with a little and work your way up.
Start with a set amount on a regular basis so that you are paying yourself first. When the opportunity arises, add more and more. Remember, any amount is good. Higher amounts are great. Ultimately, saving is saving – regardless of what you save.
Auto Savings
Did you know that if you have your earnings directed deposited that you can request your employer to put in a portion of your paycheck into a savings account that is insured by the FDIC? In addition to your employer doing this, you can request that the financial institution that you bank with do this, too.
Consider a Retirement Account
If you work for an employer, look into retirement accounts that may be offered through the company. In some instances, if you get one of these accounts, the employer may offer matching contributions – which means whatever you put into it, they will put into it, too. These accounts come with compounding interest.
You may also want to look into setting up an IRA (Individual Retirement Account) for yourself. Once you have this set up, be sure to set up automatic transfers from your checking into into the IRA.
If you have neither of these (or, both), you may set up a savings account specifically for your retirement. If you elect to do this, remember to have payments directed deposited into your account.
Things to Remember
When attempting to save money, remember the following:
- Make it a goal to start saving until it becomes a habit. Always remember – no matter what bills and debts you have – to pay yourself first by depositing money into a savings account or multiple savings accounts.
- Track all that you invest in, spend, and that you save. This will allow you to monitor what you own and where your money goes.
- Outline both your short-term goals and your long-term goals. Then, put money into your savings account or accounts so that you may accomplish those goals.
- You should immediately create an account that may be used for emergencies and unexpected events that you experience throughout life. It does not matter if it is an unexpected repair, trip, or medical issue that pops up, if you have an emergency fund set up, you will be able to face the issue head-on.
- There are certain events that you should focus on saving for. These include the education of your children, your retirement, and emergencies. You may elect to set up one savings account, but it is advised that you set up an account for each thing or event that you are saving for in order to know where your money is going and how much you have towards each thing or event. Typically, if you keep a minimum amount in each account, you will not have to pay additional monthly fees for additional savings accounts set up at certain banks – like Somerville Bank.
Steps for Saving More Money
There are many steps that you may take to save more money. The truth of the matter is, most of us have more cash than we realize. In order to discover it, you simply have to find out what you have, how you spend that, and how much you save. In addition to the steps and strategies that we have outlined in this guide, the following will help you in saving more money, over time:
- Create a budget. This helps you find out where you are with your money and will help you get to where you want to be.
- Analyze your debt and figure out a plan for eliminating it. Eventually, you will transition from paying debt to paying yourself.
- Make certain that you set goals when it comes to the money that you save. It is important to know why it is important for you to save money. If you have a strong “why”, you will definitely have a strong “try”.
- Automate your savings by having direct deposit set up in your checking account that goes right to your checking account.
- If you have subscriptions, memberships, and other similar expenses, cancel and save that money instead.
- Focus on planning meals and avoid eating out. Do not waste food, prepare food ahead of time and freeze, focus on meals that use the ingredients you already have, and create and stick to a grocery list.
- Check into the rates you pay on your insurance. Also, contact debtors – credit cards, loans, etc. – and ask if you may pay less towards interest.
- Reduce your energy costs. Take short showers, use energy efficient bulbs and appliances, adjust your thermostat and water heater, etc. This will put more money into your pocket, which will put more into your savings.
- Use apps that give you cash-back, coupons, and other perks.
- Refinance your mortgage and your car payment with a lower interest rate.
There are many ways to save! If you have an interest in a savings account, contact us here at Somerville Bank for immediate assistance: https://somervillebank.net/
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