Let’s be honest: saving isn’t always easy, especially when money is tight. But staying motivated is possible when you have clear goals and tools that support your progress. Whether you’re working toward a home, a car, a trip, or a rainy day fund, these tips can help you build strong saving habits that last.
1. Set Savings Goals
The easy goal to make is simply “I want to save more money.” Unfortunately, as goals go, it is kind of weak. Specificity is key. Set weekly or monthly goals of how much you want to add to a savings account. It is easier to hold yourself accountable when you have an actual number to make an actual comparison.
2. Track Your Savings
The only way to know if you are meeting your goals or not is to actually pay attention to your savings account. Know how much you have put in and compare it to the goals you have set. The more time you spend tracking your savings, the more likely you are to stick to your goals.
3. Know What You Are Saving For
Associate the money you are saving with something rather than just a number on an account statement. If you are saving toward a down payment for a house or a car, note that that is what the money is for. Even naming a portion of your savings as a rainy day fund or an emergency fund will give you something more concrete to save toward than just watching a balance rise.
4. Try Using Secondary Accounts
Let’s say you have multiple savings goals. You want to save certain amounts of money toward a down payment on a car, a vacation, and a rainy day fund. Instead of trying to envision each as part of one larger pool of money, save for each separately. Some places refer to these as buckets. At UNITE, we call them secondary savings accounts. They are free to members. This way, you can track your progress toward each of your goals individually.
5. Put Money Directly into Your Savings Account
If you have direct deposit and your work allows you to send the money into multiple accounts, split it between checking and savings. First, this keeps you from forgetting to put money into your savings account. Second, the added step of needing to transfer money back to your checking account makes you more likely to stick to your budget.
If you don’t have direct deposit or you can only choose one account, another option is automated transfers, where you set an amount that automatically is transferred from your checking account to your savings account every pay period or every month. This is among the recommendations of the Consumer Financial Protection Bureau when it comes to building an emergency fund.
It’s important to note that automation works best alongside mindful habits. Studies have shown that it is most effective in people who develop a “saver’s mindset,” so reviewing your progress regularly can help you get the most out of it.
6. Consider Higher Yield Options
Historically, one of the draws of savings accounts was the interest it would pay. For standard savings accounts, that is no longer the case.
Higher yield options exist, however. For those who meet the minimum deposit requirement, money market accounts typically have higher rates while allowing more flexibility in transferring money out if need be. At UNITE, the interest rate on our money market account was more than 10 times that of a standard savings account as of November (rates are subject to change).
CDs, or certificates of deposit, are another option, if you are reasonably certain that you won’t need the money for the duration of the CD. These in most cases carry higher interest rates than even money market accounts, but there are penalties for withdrawing the money prior to maturity.
7. Make Changes as Needed
Making plans is necessary, but sometimes life intervenes, either positively or negatively. Maybe you are suddenly in a position to save more. In that case, adjust your goals higher. Other times, your expenses might rise, leaving you less money available to save.
Also, while building a rainy day fund is important, if an emergency arises, use it. While trying to meet your savings goals is admirable, doing so while putting emergency expenses on a higher interest credit card will move you further from your financial goals rather than closer.
Need Help? UNITE is here
At UNITE Credit Union, we are committed to helping our members meet their financial goals. If you want more help in setting out a savings plan, contact us about speaking with one of our financial coaches.