Destination Savings: Smart Ways to Reach Your Financial Finish Line
By Cyndi Cohen Credit Unions Online
Opening a savings account is a wise choice for any budget-conscious credit union member. Whether you’re saving for a rainy day, planning for that next large purchase, or trying to solidify your assets for the future, establishing a safe, interest-bearing account for your hard-earned money is the first step in laying the groundwork for healthy spending habits. Once you have this saving starting point in place, it is important to develop a solid money management plan so you can stay on track and reach your goals.
As you begin your journey down the road of saving, you’re sure to encounter some bumps along the way - financial institution fees, rising costs of goods and services, your own pesky spending habits. Don’t let these temporary roadblocks cut your trip short! By equipping yourself with some budget-friendly strategies and following a few simple tips, you’ll be cruising down the super highway of saving in no time, destined for financial stability.
4 Tips to Jumpstart Your Savings Plan from Credit Unions Online
Track Monthly Spending
You can easily spend less and save more if you start taking inventory of your expenses and being more accountable for exactly how you’re spending money. Some credit unions offer free online money management tools, like FinanceWorks, to help you track expenses and even build a budget.
By documenting your spending, you might find that you’ve been making a lot of small purchases, which are adding up as well as spending money on things you don’t really need. By coming to these financial realizations, you’re bound to cut out unnecessary spending like dining out, frequent shopping, and impulse buying. Experts recommend that the money you free up by cutting spending be saved for future goals such as a debt-free summer vacation, higher education, your first home, and retirement.
Pay Yourself First
If you have had a difficult time saving in the past or just can’t seem to get started now, one of the best ways to start is to have funds automatically deposited into a savings account on a monthly basis. You can set it up so that part of your monthly earnings goes directly into a savings or money market account, or gets transferred from a checking account.
If you’re not ready or simply not able to make large deposits regularly just yet, there are transfer programs linked to your debit card purchases, which some credit unions now offer. In other words, when you use your debit card for purchases, your credit union makes a small transfer to your share account, thus enforcing the concept of saving as you spend.
Cut Back on Withdrawals
In order to build up your savings, it only makes sense to put money in your account more often than you take money out. The federal government agrees and has put a rule known as Federal Regulation D in place to limit the number of transfers and/or withdrawals a consumer can make from savings or money market accounts. If you exceed 6 per month, you may incur a fee, and although your credit union’s fee will most likely be less than that of a bank, it sort of defeats the whole purpose of trying to save. Moral of the story – a savings account is meant for plenty of balance building deposits rather than excessive withdrawals.
Sign Up for Overdraft Protection
Overdraft Protection, or a link between your savings and checking accounts at the same financial institution, can be a financial lifesaver when it comes to saving money. If you take the initiative to set yourself up with this safeguard, you’ll be eliminating the need to pay a penalty in the event of having insufficient funds.
The idea is that you will borrow from your savings account rather than from your credit union to cover the costs of your incident. Plus, overdraft protection not only helps you dodge financial snafus but also allows you to avoid the possibility of embarrassment at a store, restaurant, or other merchant when the overdraft occurs.
Use these helpful tips along with your credit union’s resources to put the brakes on careless spending and give saving the green light! To get started saving today, find a local credit union to stash your cash in a safe place. Use our savings calculator to estimate how much you will have saved in the future!