Have you made a New Year’s resolution to start saving? Here’s some advice to help you achieve savings success in 2017.
1. Open an account for your savings
While you could throw money into your regular checking account, not having it separated from your other funds can be confusing—in addition to making it much too easy to spend rather than save. Instead, open an account that’s just for savings.
You’ll want to look for higher dividend earning accounts like a PenFed Money Market Certificate, IRA Certificate, or PenFed Access America Checking account.
- Certificates lock your money away for a certain period of time (generally from six months to seven years), but offer higher dividend rates than a standard savings account. They’re a good way to help your money grow over the long-term.
- An IRA is designed to help you save for retirement, but you won’t be able to access your money (without penalty) until you reach retirement age. Depending on the type of account you open, there can be tax benefits for depositing money in an IRA. Consult a qualified tax advisor to determine any possible tax benefit(s).
- The PenFed Access America Checking account, for example, is widely recognized for its excellent terms and features that open the door to a wide selection of best-in-class financial products and services. Earn dividends* when you make monthly direct deposits of $500 or more per statement cycle, enjoy access to over 56,000 free ATMs, a chip-enabled debit card, and a world-class online and mobile banking experience.
Whichever type of account you choose, be sure to pay attention to the terms and conditions associated with the account to avoid being hit with unexpected fees, such as: fees for not maintaining a specified minimum monthly deposit or monthly balance, monthly maintenance service fees, or early withdrawal fees.
2. Set up a regular deposit
Next, you’ll want to start putting money into your savings account. If your financial institution offers it, the easiest way to do it is to set up a recurring automatic transfer from your checking account to your savings account—that way you’ll never forget to tuck a little into savings every month. If you can’t set up an automatic transfer through your online banking system, mark it on your calendar to transfer the money into your savings every month.
Remember, putting aside savings for yourself each month is about reaching your long-term financial goals, whether that’s building an emergency fund, saving for retirement, or saving for your next family vacation. You don’t even need to put large amounts of money into your account every month to save. Every little bit counts. Even tossing your spare change into a jar will add up over the course of the year—give it a try!
3. Make a budget
Everyone should have a budget, and if you don’t, now’s the time to make one. Sit down and chart out your expenses (both the necessary ones like bills and the less necessary ones like the occasional shopping spree), and see how your expenses fit into your income. Set realistic spending amounts for each type of expense you have, and include a category for savings. Every month, work to stick to your budget (you can always adjust it if your first budget doesn’t quite work) and put your budgeted savings into your savings account.
4. Cut back on monthly costs
So how do you find money to add to savings? First, take a look at your monthly bills. Are you paying for more than you really need? It’s easy to spend well over $100 a month on cable television, but do you need the pricey sports package—or do you watch television enough to justify paying that much at all? Shop around for different plans for television, internet, cellular service, insurance, and even utilities. You may find a lot of places to save!
5. See where you can save on finances
There are plenty of financial moves you can make to cut down on your monthly expenses, like switching to credit cards with lower interest rates, consolidating your credit card bills with a balance transfer, or refinancing your home loan or car loan. However, you’ll want to look into the market rate compared to the rate you’re paying to see if these make sense—be sure to do the math before you make any big financial moves.
And while they’re not typically a big budget drain, you should also look to avoid finance fees. Get rid of those credit cards with high annual fees and those banking accounts with pricey maintenance fees. Additionally, be sure to pay your bills on time to avoid late fees and penalty rates.
6. Stay home to save
A great way to dial down on your expenses is to cut back on food and entertainment costs like eating out and going to the movies. Consider inviting friends over for a potluck dinner instead of going out to eat, packing a lunch instead of having fast food, or have a family movie night at home instead of going out to the movie theater. You may be surprised to see how changes like these can impact your bottom line.
And remember: You don’t have to stop eating out entirely. It’s important to treat yourself every now and then. However, by having a couple more meals at home every month and brown bagging lunch a few times a week, you’ll be surprised how quickly the savings will start adding up—giving you more cash to start saving for those long-term goals.
Of course, these examples are not the only ways to save—you’ll also want to take a good look at all of your monthly expenses to figure out what works best for you. Whatever you do, the important part is adding a little to your savings every month. As long as you stick to your savings plan, by the end of the year you’ll have more than you started with!