When you were young your parents may have given you a piggy bank. In many cases, this may have been our first introduction to the practice of saving money. But why is saving important? Everyone’s answer may vary, but usually it’s to become financially independent, for a future purchase, or to cover unexpected expenses. As adults, we might need reminders about what we are saving for and how to go about it.
Common items we might save up for are a house and college education. There are smaller savings projects as well. Perhaps we need to put money aside every month to spend a bit more around the holidays or for childhood expenses like braces or sports equipment. So how can you get started?
Saving Money on Purchases
The first and most obvious solution to saving money is spending less money. Some people make a conscious effort to cut coupons, shop at wholesale clubs, or shop sale racks; however, this strategy of decreased spending may not be for everyone and may be difficult for many families to stick to. If so, budgeting can be an extremely helpful tool and can help keep track of where your money is being spent.
Technology in the 21st century can also help us achieve our savings goals. Whether it’s for coupons, price comparisons, or saving your pocket change, there are several automatic savings apps to help you save. Several of these apps are free and require nothing more of us than downloading the app on our phones. These money-saving strategies and tools can help reduce spending and build your savings.
Setting Money Aside
If you want to not only spend less money but also systematically put it aside, you can use a budgeting worksheet to help you see how much money you have available to put away after your expenses have been accounted for. There are several savings options offered by banks and credit unions which not only save money but also help it grow to make more over time. Some of these are general savings accounts, money market accounts, and certificates of deposit or CDs.
In addition to your regular savings, there are other specific causes you may want to save for. The money you save for these events is not part of your regular savings and the money from them should only be for their specific purpose. Below are some examples:
Retirement plans are important and most plans allow you to contribute money on a pretax basis. There are several ways to contribute to your retirement including 401k plans, Individual Retirement Arrangements or IRAs, and annuities to name a few.
529 plans are accounts geared towards saving money for higher education. There are two types: one that saves up for any college expenses and one that prepays tuition at a certain school starting immediately.
Christmas Club Savings Accounts are year-to-year accounts that help families save up gradually for holiday expenses without breaking your budget or racking up excessive credit card debt.
On occasion, something unexpected may come up, and you may have a need for a financial boost. Perhaps you don’t have enough money set aside in your savings or an emergency fund in place to cover the cost, or you just don’t want to empty the savings you have built-up. A personal installment loan can help you get over the economic hurdles and spread out the unforeseen costs in equal payments over a specified term. Give us a call today.