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December 13, 2023

Tips for Creating a Successful Savings Strategy

by Jackie West

Coming out of the COVID-19 pandemic, financial priorities have changed. Many people have now realized the importance of having a nest egg so that they are not left in a tight spot should something like this happen again. In addition to avoiding the urge to overspend, savings are a key factor in achieving your long-term financial goals. But saving can be difficult no matter how much you earn.

Savings Strategy Tips

Tips for Creating a Successful Savings Strategy

Most people think that to save money, you need to make extra money. Many focus all of their attention on working to earn more money and postpone setting money aside for their future until they feel they have enough extra to put in savings. While it is true that you do need to be earning money to save, there are other ways to save as well. The trick is to put a savings strategy in place and stick to it. If you are feeling overwhelmed trying to create a savings strategy, here are a few helpful tips to get you on the right path.

Structure Your Direct Deposits

The first strategy that can be very helpful when looking to save money is to determine a certain amount that you would like to save each month and have that directly deposited into your savings account from your paycheck. This will help you save without even having to think about transferring money into a different account.

The best way to come up with a savings amount each month is to list out your income and expenses. When trying this exercise, it is better to round up some of your expense like groceries, gas or any other miscellaneous expenditures that could arise. You may find after running the numbers that you can save up to $500 a month. If, however, you aren’t used to saving anything at all, that number may seem overwhelming to try and do without. Try saving $300 for the first two months to help create your saving habit and then increase it to the higher amount.

Contribute to Your Company 401(k)

Another one of our top recommended savings strategies is to take advantage of your company’s 401(k).

Many companies will offer you a match percentage for any contributions that you put in. This is a great way to add money quickly into your account. Let’s say your company matches 50% of your contributions up to 5% of your salary. If your salary is $50,000 per year and you decide to contribute 5% of your salary equaling $2,500, your employer would then match $1,250 into to your retirement account. That’s $1,250 in “free money” you just made and a total savings of $3,750! Another great benefit about putting money into your 401(k) plan at work is that it will help lower your taxable income.

Open a High-Yield Savings Account

A High-Yield Savings Account (HYSA) is a type of savings account. With a HYSA, you are going to be earning more interest on the cash that is in your account compared to a regular savings account. Say you put $1,000 into a HYSA with a 1% interest rate. After one month, you will have earned $10 in interest. While that might not seem like a lot right away, it adds up fast!

Review Your Monthly Statements

If you begin to regularly review your monthly bank statements, you may be surprised to realize you are paying for subscriptions you were not even aware of, or do not use anymore. You may also notice that your internet or phone bill increased. While it may seem like only a few dollars here and there, in the big picture of a year, it could add up to hundreds of dollars. Paying attention to these notices could give you a chance to eliminate some if these extra costs. For example, if your bill increased, you could try calling to see if there are any deals or promotions going on that could help lower your monthly bill. Then, rather than spending it on something else, take that money you’ve just saved and add it to your regularly scheduled deposit to your savings account!

There are so many great ways to start saving for the future!

We hope this article has given you some ideas about the best ways for you to put money aside for your future. If you are still unsure where to begin, we recommend sitting down with a fiduciary financial planner. A financial planner will take into account all aspects of your current situation and recommend a savings strategy to fit your unique lifestyle and needs.

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