Consistently saving is one of the most effective approaches to creating a secure financial future. You don’t have to be among the highest earners to accumulate a sizable nest egg; anyone can become an efficient saver.
Thrift Savings is Key
With bills looming and temptations beckoning, it’s easy to put saving on the back burner. But having thrift savings set aside can mean the difference between sailing through or struggling with life’s milestones, such as buying a home, financing higher education and retiring comfortably. Saving may also be your ticket to being able to afford a new car, a special vacation or other extras that make life more enjoyable. Perhaps most importantly, saving provides a cushion for handling emergencies and unforeseen expenses.
You Really CAN Save
Even if it seems as if you’ve got nothing left to put away each month, you can probably find ways to save if you closely track your spending. Making small changes, such as bringing your lunch from home instead of buying it during the workday, can create a nice monthly surplus. To keep impulse spending under control, shop with cash instead of plastic. You might be less likely to buy expensive items. Also, give yourself 24 hours before making impulse purchases.
Another way to boost your savings power significantly is by paying yourself first each month. Setting up an automatic savings plan that draws from your paycheck or checking account ensures effortless transfers. If you’ve just finished paying off a debt, you could put the amount you were paying each month toward that debt into a savings account. Don’t get discouraged if you’re still only able to save a little cash; even small amounts can grow at a surprising rate thanks to compound interest.
Maintaining separate savings accounts for specific purposes, such as a home purchase or emergency fund, helps keep you on track when allocating money to each. In addition to basic savings accounts, financial institutions such as Alliance Credit Union can help you set up dedicated accounts to accumulate cash for holiday spending or a vacation. For retirement savings and other long-term objectives, there are term certificates and money market accounts, which might require larger minimum balances, but pay higher interest rates.
Saving is a good idea for a variety of reasons, so start now in order to give yourself a better chance of being prepared to handle an unexpected financial emergency and to build a nest egg for the future
Roberta Pescow, NerdWallet