We all have trouble setting aside money for later. Maybe you’ve had a couple items burning a hole in your Amazon cart, or have been waiting for an exclusive drop from your favorite brand, or really need to upgrade your phone. But saving effectively is your best defense against unexpected expenses, and your best path towards being able to afford (really afford) all the great things you’ve had your eye on.
We wanted to outline a few of the strategies that great savers use to put their money aside. These include tips on outlining a savings plan, how to implement it, and when it’s appropriate to use those funds.
Strategy 1: Start Budgeting
This may seem obvious, but estimates say only around a third of Americans actually plan and follow a monthly budget. Not budgeting can spell disaster for individuals attempting to save, as you end up putting away “leftovers” rather than a dedicated percentage of your income. Knowing what your budget for groceries, gas, and housing is can help you keep unnecessary spending to a minimum, which in turn allows you to redirect those funds to a savings account.
Don’t have a budget yet? Not to worry — Equity Bank’s online budgeting tools can help you sort your expenses and fine-tune your spending.
Strategy 2: Find Accounts that Earn
Not all savings accounts are created equal. Some are simply glorified checking accounts, where your money is accessible, but earns little or no interest and generates no additional benefit. You want to avoid this at all costs. Most financial institutions offer accounts that generate interest based on the amount deposited: the higher the account value, the better the interest rate. Some, like CDs, require that you keep your money in that account until it “matures” or pay a fee to withdraw early, which can cut into the profit you’ve gained from interest.
Be sure to research carefully before deciding which savings account is right for you. If you are having trouble, speak to an Equity Bank representative about account options.
Strategy 3: Eliminate Expenditures
Bad habits. We all have them, we’d all like to look the other way when we see how much they cost. They can take a number of forms: smoking, eating out too often, paying for services you no longer use just because you want to avoid the hassle of cancellation. These additional expenditures add up, and can make it seem like there’s no money left to save at the end of the month. While quitting bad habits isn’t easy, tracking how much you spend on them and making a plan to save those costs can make the process rewarding rather than a test of self-discipline. Seeing a little extra in their savings account at the end of each month is often all the encouragement people need to start chipping away at their bad habits.
Strategy 4: Pay Off Debt
The interest you earn on your savings can easily be offset by the interest you accrue on unpaid debts. Credit cards, student loans, and medical debt can not only crater your credit score, but also prevent you from budgeting and saving effectively. Make it a point to attack your high-interest debts as quickly as you can. Electing to pay more than your minimum required payments can help you pay off your principle more quickly, and prevents interest from snowballing into an insurmountable obstacle. Getting out from underneath your debts can help you realize gains from savings and investments sooner, and set you on the right path to financial freedom.
Strategy 5: Set Goals and Boundaries
Saving without a target is a recipe for disaster. In the heat of the moment, most of us will justify eating into our savings for things we really shouldn’t. Defining which purchases justify a use of your savings early on can help you stay on track and be more considerate of your spending. Saving for an emergency fund, a down payment on a vehicle or home, or other large purchases is much more important than concert tickets or a spur-of-the-moment trip to the beach. Set clear rules for using your savings account, and you’re much more likely to succeed in growing it.
Bonus Tip: Use AutoSave
While the previous strategies are useful, they all rely on one crucial factor: self control. Luckily, Equity Bank offers AutoSave, a tool that commits a portion of your balance to savings at scheduled times. Dedication to a saving goal is much easier when it happens automatically, and this can prevent you from accidentally eating into your savings with payday fever.
Executing a sound savings strategy mostly comes down to making a plan and having the will to act on it, but having a trusted partner by your side can’t hurt. Equity Bank is here to help you create the financial future you’ve always wanted.
Contact us today to learn which Equity Bank services are right for you, or visit your local branch to speak with one of our talented team members in person.