You’ve heard the saying, “A penny saved is a penny earned,” but why, how, and where should you be saving?
Let’s begin with why you should be saving. While we hope that life goes smoothly and there are no unexpected emergencies, that’s just not realistic. It is important to begin saving so you will be prepared for emergencies that arise, things like when the dryer stops working or your car needs repairs or new tires. This can also be an account to help prepare for a planned vacation or a large, expected expense. Preparation is key!
Save regularly toward your goals – it will add up quickly! Photo source: UF/IFAS Extension
That leads us to the next pieces – how and where do you save? This all begins with taking the steps to open a savings account. These days, opening an account can be done from nearly anywhere. You might visit a financial institution’s local branch, make a phone call, or even go online. You will need to provide a few pieces of personal information for verification and often you are required to deposit a sum of money to activate the account. Once your account is open, you can decide how to add money into it. Perhaps you deposit a certain amount from a regular paycheck or funding source, maybe you would prefer to transfer funds from other accounts, or you can deposit cash or checks periodically.
One thing about a savings account is the money is typically not as accessible as money in a checking account. This is all by design – the funds you allot to your savings account should be left alone and not used frivolously. An advantage to a savings account is the interest earned on your money while you aren’t doing anything with it. It won’t be much in the beginning, but, over time, interest earned could be a bit of a boost to your savings, helping you reach your goals more quickly.
To reach goals, you need to plan them out – be SMART. SMART goals are Specific, Measurable, Attainable, Relevant, and Timed. Decide what you will be saving for and be specific. Will this account be for emergencies, vacation, or a vehicle? Your savings goal should also be measured in some way so you can track your progress. Ensure your savings goal will be attainable, set yourself up for success, and be realistic with the amount of money you are setting aside. Your savings goal also should be something you are excited to work towards to make it relevant to you. Lastly, give yourself a time frame for reaching your savings goal. Will this take a month, one year, five years? Whatever you decide, stick to your time frame. Being able to identify your goals will aid in your savings success.
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