7 Easy Steps to Begin Saving
This week is "America Saves" week, an opportunity for organizations to promote good savings behavior and a chance for individuals to asses their own saving situations.
FamilyMeans is proud to be a part of this event, and in doing so, is happy to share some of our knowledge and tips to help individuals and families save. There are many systems out there to help you begin saving, and not every system is a perfect fit for people. It can be helpful to try out different savings goals and tips, and see what makes most sense for your life. The goal though is to set up some kind of system that is hands-on, and fool-proof too. Most importantly though, is to keep it simple. If it's too difficult of a savings plan, you likely won't follow through.
To get you started, here are seven simple steps our credit counseling experts suggest when starting a savings system:
1. Set Up a Payroll Deduction.
Setting up a payroll deduction is a way to have a fixed amount of income sent directly from payroll to a savings account. If you are in charge of transferring funds, you’ll probably find an excuse to skip it once in a while. Payroll deposits are the way to go as the funds never pass through your regular bill-paying account! If you never see it, you’ll never miss it.
2. Get a Second Free Checking Account
If you have a savings account which isn't free, or requires a minimum deposit, consider setting up a second checking account which IS free. Use the second account for "sinking funds" or periodic savings.
3. Set Up an Automatic Transfer
If your employer doesn’t offer a payroll deposit, setting up an automatic transfer between banking accounts can be a smart savings system tip. The idea is to get the money out of your “spending account” and into a savings account to prevent you from inadvertently using it.
4. Use Separate Financial Institutions for Checking and Savings Accounts
Setting up separate checking and savings accounts with different banks or financial institutions makes accessing and transferring the savings funds more difficult, and you will be more likely to leave the money in the account. We live in a “spending world” where if you know the money is there, you’re likely to spend it.
5. Categorize Your Accounts
If having one ‘catch-all’ account doesn’t motivate you to save, set-up multiple accounts for your top 2-4 planning needs. ie: CAR things, HOUSE things, MEDICAL, TRAVEL and usually the EMERGENCY Fund. If you do better saving for a specific goal, this system works well - - and you’ll stay motivated if you get to benefit in the end, with a vacation, new car, new home, etc…!
6. Set Up Savings Jars or Other Container "Banks"
If banks aren't an available option for you, consider setting up jars, coffee cans, shoe boxes, plastic containers, or other savings "banks" at home, in a safe place. be consistent and make sure you "deposit" you pocket change as well as regular amount every payday. No matter how small the amount may be, you will begin to build!
7. Get Help To Begin Saving
If you don't trust yourself to save on your own, find a trusted family member or friend who is willing to save for you. Give them funds every payday to deposit into your account or savings jar. You'll think more about using the money when you have to justify the withdrawl to a family member or friend. Making it harder to access the funs is a tried and true savings technique!
If you're looking for other ideas, contact us for our Savings Booklet with this list, and other tips geared towards "America Saves" week. If you have a great savings tip idea you've tried, we'd love to hear about it in the comments.