In today’s economy, people often say “it’s hard to save money.” I agree it can be difficult, however, not impossible to achieve. Honestly, I can’t understand how a person can afford not to save for unplanned emergencies. A practice I learned early on as a child, save for the future; is not common today. Funds can be used to make a large purchase, for unexpected large expenses, or in the event of a loss of income. How can I save? Here are some practices I use that have aided me in saving.
I’m sure most people have heard the saying “pay yourself first” I live by it. I treat my savings account as a bill that must be paid every time I receive a check. When I receive funds a portion goes directly into my savings account. This is a good practice to have. Even if it’s a small amount, ensure you put something away. You will be amazed at how these small amounts accumulate over time. For an emergency fund, I recommend having 6 months to 1 year of your salary in a liquid account. Pay yourself first, this is an excellent practice to get into the habit of.
Extra Funds? Put a portion into Your Savings Account
You receive a bonus at work or maybe if you are lucky, you receive a large income tax return. Do you treat yourself to a Michael Kors purse? Maybe a vacation? A shopping spree? Make sure you put a portion away in your savings account first. I’m certainly not saying don’t treat yourself! I believe in treating myself. However, putting a portion away will help you move closer to meeting your financial goals.
Forget about the Savings Account
The point of having a savings account is to save. Put the funds in the account and forget about it. Putting the funds in and then taking them out a week or so later defeats the purpose. The purpose is to accumulate wealth. The money should be used only in the event of an emergency or if you are saving for something specific that you are now ready to purchase.
Open a CD
Once the balance in your savings has grown to where you can invest in a CD, open a CD also known as a Certificate of Time Deposit account. A CD typically pays a higher interest rate than a savings account. This strategy will help grow your money faster by allowing the funds to sit and grow at a higher interest rate.
Avoid Paying Service Fees
Ensure that you are paying your bills on time and avoiding service fees. Service fees can add up quickly and if avoided save you a lot of money. The funds you save by avoiding service fees, should be invested into your savings portfolio.
After establishing sufficient emergency fund in your savings account and investing in a few CD’s, now you can explore investing in other options. I strongly suggest speaking with a licensed investment professional to come up with the best plan for your further investments. Find a professional you feel comfortable with and ask as many questions as you can think of. Investments can lose principal, so be sure to understand what your investment goals are, your strategy and the risks.
Saving can be a challenge however it is attainable. Having a healthy savings plan and strategy strengthens the economics of the family. The relief of not worrying over money helps aid in enjoying life and your family on a profound level. What are some strategies you use to save and increase wealth?
Written by: Rochella Neely
“an open book”