Do you struggle to save? If so, you’re not alone. According to a survey from GoBankingRates, only 5% of Americans have $10,000 – $20,000 in their savings account. Add in inflation and student debt, and sticking to a savings goal is becoming harder. However, even setting aside a minimal amount each month can go further than you think. Here are five quick actions that can help maximize your savings.
1. Set Up Automatic Transfers to a Savings Account
Automatic transfers may be an excellent option if you tend to forget to deposit money into a savings account each month. You can use a Travel Club or Holiday Club savings account to save for a specific goal.
One benefit of a club savings account is that you can set it up to automatically pull money each month from your savings account or your direct deposit. You can also earn monthly dividends, which will add to the total amount saved.
2. Set Savings Goals for an Emergency Fund or Other Big Expenses
Without a goal, you’re less likely to save. Saving for a purpose often gives you more incentive to keep going. Decide whether you’re saving for an emergency fund, a new car, the down payment on a home, or anything else, and then work towards it. Research has proven that setting specific goals is more effective than not having a purpose.
3. Use Certificates to Earn more Interest
Certificates of Deposit, more commonly known as CDs, are great ways to earn more interest on your savings than a conventional savings account.
Most financial institutions pay you interest for leaving your money on deposit with them, but the percentage of interest can vary greatly. Certificates typically yield much higher interest rates than regular savings accounts, which means you can earn more in interest income with a certificate. For example, if you deposit $10,000 in a regular savings account that has a 0.07% APY* and leave it for three months, you’ll earn around $1.75 in interest. However, if you put that same $10,000 into a certificate with 0.20% APY, you’ll earn approximately $5.00 in interest after three months. Imagine how much more interest you could earn if you leave that money on deposit for longer and at an even higher rate. And now, for a limited time, 12-month certificates earn an APY of 0.75% at FFCCU!
In addition to the higher interest rates, if you withdraw money from a certificate before the term is up, you will face a financial penalty. Knowing you’ll be penalized can remove the temptation to spend that money. Plus, if you know a large purchase is coming up a few years from now, you can take advantage of a certificate and earn interest on that money until you need it.
4. Make Some Extra Money Off Unneeded Items
If you have old items you no longer need or use, consider selling them on sites like Mercari, Poshmark, or Facebook Marketplace. Even though you won’t get back what you paid initially, it’s one way to recoup a little bit of money while getting rid of clutter. Most importantly, take whatever cash you make and put it directly into your savings account!
5. Review Your Savings Goals Every Few Months
Once you start saving, don’t forget to check in each month to make sure you are hitting your goals. You may need to adjust your savings depending on your monthly expenses or income.
If you have a month where you incur extra expenses, like car maintenance or home repairs, try to catch up by saving more the next month. It’s also a good idea to take the opportunity to save more money when you have extra income like a bonus at work or a tax return.
6. Start Working on Your Savings Goals!
While saving is sometimes not your priority because of monthly bills, it’s good to set aside time to see how you could maximize your savings and find a method that works for you. If you need help setting up a savings account, certificates, or holiday/travel club account, contact us today. We can help you reach your savings goals!
*APY=annual percentage yield