We hear it all the time – saving money is important. But in many cases, that’s easier said than done. Putting money aside in a savings account can be challenging after paying all your bills, even after you’ve already created a budget.
Here's a little secret: With the right approach, you can save money and not feel like you're going broke, no matter how much you make. It also means you can still have money to spend on things you want without feeling like you have to deprive yourself.
You might not be thinking about long-term financial goals every day, but getting into a regular routine of saving money with the explicit purpose of meeting those goals will help you reach them faster.
First, think about why you're saving money. Everyone has a financial goal, whether it's saving for a vacation, a car, a down payment on a house, an emergency fund, paying off debt, or something else. What's yours?
A good place to get all this written down is in Money Manager, located in Online Banking. When logging in, select “Money Manager” from the upper navigation window and then click “Goals” from the icon menu that appears. You can use this menu to add a savings objective of your choosing based off the accounts you've added to Money Manager.
Make a Plan
Once you establish your goals, you'll need to figure out how much you'll need to save for each of them. Don't worry about an exact number for now. Even a rough estimate can help you understand how much you'll need to put aside each month. If you would prefer one-on-one help setting your savings goals, consider signing up for a free Financial Health Check.
Here's a look at some of what your goals might be to get a better sense of how much you should put aside for each:
We've all had the unexpected happen to us, whether it might've been losing your job, needing surgery, or paying for last-minute airfare to care for a loved one. Think about how much you'd need to cover expenses for three to six months without working – that is your target goal.
Paying off high-interest debt
Living a debt-free life is a dream for many of us. High-interest debt is often the most burdensome, because the higher the interest rate, the more you'll owe. And just making the minimum payment every month means you're only paying on interest, not the actual amount you owe to the lender.
We say it all the time, but it's never too early (or too late) to start saving for retirement. The earlier you start saving for retirement with a savings account, 401(k) or IRA, the more time your money has to grow. The end result is a wealthier retirement. Learn more about retirement planning in this article.
Execute Your Plan
No matter which goal(s) you're targeting, it's perfectly okay to start small. Try the following:
Tactic 1: Save one penny on each dollar you make
Try doing this with paycheck – it amounts to 1% of your income. In the short term, that's money you won't miss. In the long term, that's a decent amount of money you can put aside. Say you make $50,000 a year after taxes – that amounts to $4,166 per month, or roughly $2,083 with each paycheck (assuming you're paid twice a month.) 1% of each paycheck comes out to approximately $21.
Tactic 2: Trim $20-30 off recurring monthly expenses
If you search through your monthly account statement, there's probably at least one recurring expense you could cut back. Not watching Netflix anymore? Cancel your subscription and put the $15 in your savings. Or, instead of taking an Uber or Lyft somewhere, consider driving yourself. That would also help you cut back on how much you'd spend on drinks while going out, which leads to even more saving.
Tactic 3: Open a CD
A CD (certificate of deposit) can be a great way to get more out of your money. Even starting with as little as $100, you can open a CD with an “add-to” option, which lets you make additional contributions while keeping a fixed interest rate1. Then, you can add to your yearly savings by a practice known as CD laddering – basically, a strategy that enables you to earn higher interest rates on what you put in. Read more about it here.
Monitor Your Progress
Once you've set your plan in motion, it's always a good idea to periodically check your progress. Refer back to your goals in Money Manager with each paycheck, and see how much your savings is piling up. You could even consider starting an automatic savings plan , and taking steps to automate the amount you put aside with each paycheck.
With the right strategy and approach, you'll be amazed at how much you're saving. All it takes is a little planning.
We hear it all the time – saving money is important. But in many cases, that's easier said than done. Putting money aside in a savings account can be challenging after paying all your bills, even after you've already created a budget.
1 Additional contributions up to $1,000/mo have to be recurring for the term of the CD. Amount can be decreased but not increased during the CD term.