Questions to ask yourself now
Saving for emergencies, retirement, or other expenses can seem difficult, but there are some strategies that can make it easier. Saving can start with identifying your savings goals, finding unnecessary expenses to cut, and deciding where to put your savings. Start by asking yourself some of these questions.
Do I have savings goals?
Knowing why and how much you want to save can help you stick to a plan. For example, if you have a young child, ask yourself if you plan to help pay for college. Research indicates that children who have a college savings fund are more likely to go to college than those who don鈥檛. Start by looking at 鈥鈥 sponsored by your state (typically with cost and tax benefits for residents) and compare them to other education-related savings options, such as a . Learn more about savings for college-related expenses in the Consumer News article, Thinking About Upcoming College Expenses?
Perhaps you have shorter-term goals, like to plan a vacation or wedding, or to make a large purchase for your home. Establishing the amount and timeframe within which you want to save can help you break down a larger amount into more manageable amounts to save over time. Learn more about how Savings Are Great for Short-Term Goals Too.
How can I spend less?
Review how much you spent in the last few months and consider ways to cut back. Start by reviewing recurring expenses, even small ones, and determine what you might be able to cut out, downgrade, or find a better deal on elsewhere. Visit to create a monthly spending and saving plan. Determine what you can change to help you reach your financial goals. For example, try to pay less in interest. If you have multiple loans or credit cards, pay off the ones with the highest interest rates first. Regularly and correcting errors can result in considerable savings on loans and insurance policies.
Am I saving money on a regular basis?
Automatic transfers into savings on a set schedule can help you save money before you spend it. You can arrange with your bank to automatically transfer a certain amount from your checking account into a savings or investment account on a regular schedule. Automatic savings programs help to build an emergency fund or save for the future. For example, if you are paid every other week and put $20 into your savings account each pay period, that adds up to $520, plus interest, to your savings each year. Read more about how Starting Small Can Lead to Big Savings.
Do I have an emergency savings fund?
Financial experts generally recommend that you have at least six months of living expenses in a federally insured product, such as a savings account or a certificate of deposit (CD). Just note that CDs generally have a penalty for early withdrawal, so be sure to check with your bank on fees. The idea is to help you withstand a major reduction in income, such as from a job loss, or to pay for a major, unexpected home or car repair. To build your , consider a combination of regular, automated deposits and any 鈥渨indfalls鈥 you receive, perhaps from a tax refund or a bonus at work.
Tax refunds provide a great opportunity to start a new savings account, contribute to your emergency fund, or reduce outstanding debt. The IRS and programs offer free basic tax return preparation to qualified individuals. By assisting taxpayers to prepare their taxes, VITA/TCE providers ensure taxpayers are receiving all the credits for which they are eligible, such as the Earned Income Tax Credit, and that can lead to a large refund. The safest and fastest way to get your tax refund is to have it electronically deposited into your bank account through the .
Where should I put my savings and how much risk am I willing to take?
A traditional 多宝游戏下载-insured savings account is a great place to put money aside for savings goals, as it allows you to withdraw funds easily and earn some interest. These accounts do not come with checks and the bank may limit the number of withdrawals you can make, which helps you avoid the temptation to spend your savings before you鈥檙e ready. You can even set up automatic transfers from your checking account to keep your savings separate. This separation helps to avoid spending your money frivolously.
Investments such as stocks, bonds and mutual funds can produce higher returns than bank deposits over many years, but the value of those investments are subject to fluctuations in the market. (Remember, non-deposit investments are not insured by the 多宝游戏下载.) In general, the longer you plan to keep money invested and the greater your tolerance for risk, the more likely these investments can help you reach your targets. Visit to learn more.
Am I saving enough for retirement?
For many, the answer is 鈥渘o鈥 even when they think it is 鈥測es.鈥 Options to save include workplace retirement plans, and offered by many banks and investment companies. As with other savings goals, it is important to understand why you are saving and how much you need to save. Financial needs change through all stages of our lives. Start by determining what your expected retirement income will be and compare it to the expenses and debt you think you will have in retirement. Read Saving for Retirement for more tips to consider.
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