Simple tips and tricks for saving money.
As seasons of life ebb and flow, so might your financial situation. This is why it’s important to frequently reevaluate how much money you’re spending and saving on a regular basis. As factors like your income, your car, or your house change, so should your savings plan. May-be you’re one of the many people in this country who doesn’t currently have a savings plan at all.
“Only about 50% of Americans have any sort of savings account,” says Amanda Love, the assistant vice president and market manager at First Mid Bank & Trust.
“And that’s not even how many people have saved there commended three months’ salary, that’s just how many have, at minimum, a basic savings account.” Having access to emergency funds when life throws a financial curveball can oftentimes save people from life-long money problems.
“If you’re new to the process of saving money, I’d recommend just your run-of-the-mill basic savings account. It’s nothing fancy, but it provides a psychological advantage when money goes somewhere you don’t normally see it and it builds up a little bit more each month,”
Tyler Luebbert, a loan officer at Mid America Bank
“Contributing money into a 401(k), IRA, or529 plan for children’s future education are all great things to set up in addition to a basic savings account.”
Amanda Love; First Mid Bank & Trust
Many banks also allow customers to open a savings account for kids so they can learn financial responsibility at a young age.
“We do waive fees off that type of account, and it just helps you and your kids start saving for their future education, big purchases, and any other expenses that may arise,” Amanda says. “Contributing money into a 401(k), IRA, or529 plan for children’s future education are all great things to set up in addition to a basic savings account.
Once you’re better acquainted with saving money, and you feel like you’ve been consistently saving enough for emergency funds, you may consider transitioning your cash to a money market account.
These can sometimes be higher interest accounts that banks and credit unions offer, so a higher balance (roughly in the range of about $10,000) is needed to open this kind of account. However, the advantage is that you earn a little bit more on your money thanks to higher interest.A money market account is a good idea for someone who still wants to put their funds out of sight and out of mind while still having access to it in case the need arises.
“You can still write checks off a money market account, but there is a limit to how many you can write per month, just like with a savings account,” Amanda adds.
According to NerdWallet.com, certificates of deposit (CD) accounts are another great option for those with a higher savings account balance looking to earn more interest. The difference between a money market account and a CD lies in how much access you have to your money and the interest rate. With a CD, you earn higher interest than a money market account, but you may only be able to access the funds after a certain number of months or even years. If you hope to one day open one of these types of accounts, keep in mind that a lack of budgeting can oftentimes be what stands in people’s way.
A lack of budgeting can sometimes be what stands in the way of someone being able to open a higher interest money market account. Coming up with a monthly budget based on different factors like income, house payments, etc. can help get you on the fast track to financial stability.
“Budgeting is one of the most important things people can do because a lot of people I see that don’t budget well and live outside of their means can find themselves in a tough spot later down the road.” Tyler says.
How much you save each year often depends on what your long-term savings goals are. The bigger your monetary goals, the more you should save. But in general, having at least three months of living expenses can be a life saver.
“Once you figure out what percent of your income you want to save each month to reach that yearly goal, break it down by paycheck and set up an automatic transfer with your financial institution,” Amanda says. “Have that specific amount you’ve decided upon transferred into your savings account so that it’s kind of out of sight out of mind.”
“Many people want to save for anew house or new car,” Tyler adds.“Having those goals in mind is really good because then you have a solid number in mind when you sit down and crunch the numbers.”
While it may sound simple to sit down and come up with a savings plan, there are a lot of factors to consider, which is why it’s never a bad idea to turn to financial experts for help. Thankfully, there are several qualified resources here in the Jefferson City area that can help people get ahead. There are also many free apps and websites that can help you break down and visualize what you’re spending each month com-pared to what you’re making. For people who are tech-savvy, Amanda suggests NerdWallet and Mint as great apps to start with; or even a good old-fashioned Excel spreadsheet.
“At the end of the day, it’s all about being disciplined and keeping that goal in mind,” Tyler says
Tap into savings with these apps:
Mint: Budget & Expense ManagerFree personalized insights, custom budgets, spend tracking, and subscription monitoring
Nerd Wallet: Finance TrackerInsights you need to make the most of your money—start with the big picture and see all of your financial accounts on one screen.
Acorn: Invest Spare ChangeRounds purchases up to the nearest dollar and sends the change to savings, giving your money a chance to grow in the background of life.
Excel: Spreadsheets
Ellevest: Investing for Women
“Budgeting is one of the most important things people can do because a lot of people I see that don’t budget well and live outside of their means can find themselves in a tough spot later down the road.”
Tyler Luebbert; Mid America Bank