When you are on your financial wellness journey, there are many steps along the way that will help you maintain your good credit and also create wealth. One way is to start saving money now. Trust me, this is a financial commitment that I am personally constantly and consistently working on.
Often times the beginning of the year is when you begin to recover from holiday spending, make major purchasing decisions like buying a new car or house, and set budgeting goals. You may even think that you cannot afford to save any money at this time. I am here to help! You do not need a lot of money to start saving, you just need to start saving! Remember having that piggy bank or empty container to save your change? Well, you can use that same discipline, but utilize an interest-bearing account, such as a savings account, to earn free money on the money you are already saving. Collecting your change is an excellent way to start saving money. The difference between saving it at home and saving it at your financial institution, is earning the free interest from the bank. Who does not like “free” money?
When I teach financial literacy classes, I tell them that part of budgeting includes saving. When you cash your check, “keep the change” to deposit it into your savings account. Most savings accounts have a range of $0–$50 to keep as a minimum balance to avoid a service charge. Ask your banker and read the disclosures to be sure. Find out what types of savings products your bank offers and choose the best product for your budget. Your banker will make sure your accounts are earning the best return based off of the average you can maintain. You will be amazed at how much the “change” from your paycheck adds up over time. I remember a client of mine that always saved $10 plus whatever the change was each paycheck. That client ended up saving thousands of dollars. If you can afford to save more than the change, factor it into your monthly budget to avoid having to withdraw any funds back out. If “life” happens, you will have a financial cushion to fall back on. Try not to attach your savings account to your main ATM card, to help refrain from the temptation to withdraw what you see.
I will be diving deeper into the different types of savings products over the next few weeks to help explain the pros and cons, to help you make the best choice for your financial wellness. Keeping all of your money in your primary checking account may seem like the easiest option for managing your cash. Investing in yourself by setting some cash aside into a savings account will put your money to work for you by earning interest. Get creative and use the savings account to save money for your summer vacation, the down payment for that dream house, to purchase that new car, or to be prepared for back-to-school shopping and holiday gifts. There are so many options that will take the worrying out of the work. Setting up an automatic transfer of $5 per paycheck is a great place to start. If you need to save more, or less, just make sure you can commit to the amount. “Set it and forget it!”
Lastly, know that you may only transfer “from” the savings “to” the checking a minimum number of times to avoid fees, depending on where you bank and the type of account. #BankWithBea -Questions? Email firstname.lastname@example.org