It’s the end of the month and once again your good intentions to save have been thwarted by unexpected expenses or—let’s be honest!—temptation.
Guess what? You’re not alone.
A recent study by Bankrate found that 66 million Americans had absolutely no money saved for an emergency, including people with annual incomes between $50,000 and $75,000. And research from the Federal Reserve showed that almost half of all Americans would have to borrow money or sell something if they had an unexpected $400 expense.
We’re guessing the no-savings club is one you’d rather not be a member of and we have five suggestions to put you on the right track to better savings.
- Get in the habit of saving. Like exercise and eating right, saving doesn’t just magically happen; you have to make it happen. One of the best ways to establish that habit and make it stick? Automatic withdrawals. That way you’ll always pay yourself first and you won’t be tempted by that “extra” cash sitting in your checking account.
- Create savings buckets. Earmark your savings categories. Make one a rainy day fund and set a target of saving up at least six months of your paycheck. Create another one for those bigger expenses that hit on a regular basis—for instance, your real estate taxes or car insurance. Divide the total amount due by the number of paychecks until the next time this fee comes up and put away this amount each paycheck. Then, when that bill comes up again you’ll have the cash you need to pay it. Again, automatic deductions make the process much easier.
- Open a certificate of deposit for three months. Certificates give you a higher level of interest than you’d get from a savings account and the three-month window should be short enough that you won’t need to tap into this money before the certificate matures. When the three months are up, just add more money: You’ll be able to access the original funds (plus interest) if you need to, and you’ll get a higher yield on anything that stays in savings.
- Open an Individual Retirement Account (IRA). IRAs can be a great way to save for retirement and most people will get tax advantages from using them (talk to a tax advisor to learn more). Just like your other savings buckets, use automatic withdrawals to ensure you’re making regular contributions.
- Meet with Summit. The tips we’ve listed here are great general savings strategies, but if you want to really own your financial independence, we strongly recommend meeting with one of Summit’s financial experts. They’ll take the time to understand your unique savings goals and financial needs and help you develop a plan that makes sense for you.
Ready to save smarter and really own your financial future? Summit’s here to help!