Savers with a plan can be over twice as likely to save successfully for things like retirement and their education. Start your savings habit during America Saves week by creating a simple savings plan when you take the America Saves Pledge for a chance to win up to $750.
Here are our top tips for setting up your saving plan:
1) Set a goal
There are plenty of good financial goals out there. Start or grow your emergency fund or retirement savings, save money for a car, house, or vacation, save for school or a wedding… In general, an emergency fund is a great place to start since it can help you avoid debt down the line. Your goals should be tailored to your life and financial situation.
2) Break it Down
Cut your goal into bite-sized pieces. How much do you need to save every month? Every week? How long will it take you? How long if you save an extra 1% of every paycheck? This is a good point to look at your budget (or make one) and figure out where you can cut back. Maybe this is a good motivation to ask for a raise, pick up a side-gig, or cut out a habit or luxury item that you don’t need.
3) Create a System
Set up a separate account for your goal. This helps you avoid spending your goal money accidentally, lets you watch your goal account grow, and may help you earn higher interest than if you leave that money in a checking account. Our Vacation Club account is a good option for this.
Consider creating a system to help you spend less, so you can put the extra toward your goal. If you want to start bringing lunch to work, you may want to get yourself a lunchbox and some travel containers. A meal planning or grocery app may help. Look into coupons or store memberships that will help you save money on groceries. If you want to save money on gas, look into public transportation options or fix up that old bike in the shed. Try to make it easy to follow through on your goals, but avoid spending too much cash up front. We’re saving here, after all.
4) Make it Automatic
Pay yourself first! Set up automatic transfers or direct deposit to put money directly into your shiny new goal account each paycheck. Don’t give yourself the chance to spend that money, or to forget your monthly contribution. Make it automatic!
Consider adding ways to save the bits and pieces in addition to your direct deposit amount. You might add spare change or every $5 bill you get to a mason jar on your dresser. You might use an app to sack away the “change” on your purchases. You might reward yourself for skipping coffee by adding some mullah to your goal account. Whatever your approach, set up the systems you need to make it a habit.
5) Check In and Check Up
Don’t just set your savings up and then ignore them. Keep yourself accountable. Do a check-in every week, month, or quarter. See where your savings are at vs. where you want them to be. Do you need to up your contribution? Maybe you’ve met your goal (whoohoo!). Maybe something else is more important now, and you need to adjust your goals. Take the time to re-evaluate and adjust as your situation changes.
What steps help you save for the future? What are your money saving goals? Let us know in the comments or on social media @SPFCU.