Finance 101: How to Start Saving

Saving money finance

Saving money: It’s something that almost everyone knows they should be doing. But sometimes, it seems easier said than done. It can be hard to think about saving if you feel like most of your money goes toward everyday living expenses.

However, it’s good to get into the habit of setting money aside into savings — even if it isn’t a lot at first. As you get used to saving, you may be able to contribute more in the future. And the money you’ve already saved can begin collecting interest.

The bottom line: saving money is all about taking care of your future self. Saving consistently and efficiently can set you up to be financially healthy for years to come. 

Savings account

Almost anyone can open a savings account — and everyone should. Many financial institutions offer their account holders both a checking and a savings account. When you pay for something via debit card or check, that money is deducted from your checking account. Meanwhile, the money in your savings account stays untouched unless you choose to make a cash withdrawal from it or move the balance to checking.

Some banks might require a minimum balance in savings, which is often between $25 and $100. If you’re just getting started with saving, aim to save at least that much when you open the account. You can always set aside more as you turn saving into a habit.

As you look toward the future, you may want to consider opening a high-yield savings account. These accounts offer higher interest rates, among other benefits, though they generally require a minimum balance of at least $5,000.

Emergency fund or “peace of mind” account

Do you have a mortgage, own a vehicle, or pay bills? Do you ever go to the doctor or need medical care? Are you a parent? This one’s for you.

Actually, it’s for everyone. The more responsibilities you have in life, the more important it is that you have an emergency fund. As we like to call them, “peace of mind accounts.”

But currently, only 28% of Americans have emergency funds, according to a Bankrate study on financial security. And another report by the Federal Reserve found that nearly 40% of people wouldn’t be able to come up with $400 for an emergency.

If you find yourself represented by one of the statistics above, don’t worry. Now is as great a time as ever to get started on your emergency fund. Even saving a small amount of money and setting it aside for a broken-down car, an unexpected medical bill, or a change in employment goes a long way. Preparing for your financial future is a great way to bring yourself some peace of mind.

Saving for higher education

If you’re a parent, you’ve probably wondered what your child’s future looks like. Will they become a teacher, a veterinarian, an architect? No matter what they decide years down the road, you want to make sure they have every opportunity — and many careers require higher education in the form of college or technical school. 

If you haven’t already, it’s time to think about setting up a 529 savings account. Because education isn’t cheap. According to research by The College Board, the average cost of attending a public, in-state university in the United States was $21,950 per year, including living on-campus. The actual cost for your child could be much more or much less, depending on many factors.

But having money saved for higher education — whether that’s college or a technical program — can help provide your family with flexibility when it comes to making that important decision. In the end, you want your child to make the best choice in order to meet his or her academic and career goals. Don’t forget: the earlier you start saving, the more opportunity your child’s 529 account has to grow over time. 

Saving for retirement

Depending on your place of employment, you may already be enrolled in a company 401(k) retirement savings plan. But even if you’re self-employed or your employer doesn’t offer a plan, you can and should still save for retirement.

The earlier you start saving money for retirement, the more your retirement fund can grow. So even if you’re in your 20s — and perhaps presently more concerned with paying off student loans — don’t forget to invest in your future. Investopedia highlights the potential for retirement funds to grow exponentially throughout the life of someone who begins investing early.

No matter how old you are, making a commitment to saving for retirement will benefit you for years to come. And it’s never too late to start. You might consider working with a trusted financial advisor to help you set goals, formulate a savings plan, and ensure you achieve your long-term goal of a comfortable retirement.

Automate your savings for maximum efficiency

One of the easiest ways to start saving is by automating the process. With Academy Bank’s Saving Cents feature, it’s easy to set up automatic transfers to your savings account. Here’s how it works:

  • Choose - Choose how much you'd like to round up your debit card purchases from your checking account. Options range from the nearest $1 to $5 increment.
  • Save - Every time you make a purchase, we’ll round it up. Each night all the extra change is transferred automatically from your checking account to your savings account.
  • Track - We keep track of Saving Cents transfers and place that information right on your bank statement each month.

It’s a great way to pad your bank account in a way that helps you meet your savings goals. You’ll be saving each month, and you won’t even feel it.

When it comes to saving money, it’s all about making progress. Even if you start small, saving something is better than nothing. Continue setting smart financial goals. Then, saving will become a habit. A habit that allows you to invest in yourself, your future, and your family’s future.

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February 4, 2020 | Posted in: Savings