Most Americans are experiencing savings challenges these days, whether finding a way to purchase a home, buy a car, or plan for college. That’s why having a savings plan is more important than ever and why National Savings Day was started. Observed every October 12th, National Savings Day was founded in 2017 by Capital One to create awareness of the importance of saving and educate Americans on the best ways to save.
How you can celebrate National Savings Day
The extra money will always be beneficial, whether saving up for a big-ticket item or having a security fund if needed. So, what are some best practices for saving?
Identify long-term and short-term goals. What are you saving for? When will you need the money? How much will you need? Answer these questions before you can implement your savings plan. This calculator can help you determine how long it will take to reach your savings goals.
Put a little aside every month. Whether it’s $10 or $100, putting back a little from each paycheck can make a big difference. Over time you could accumulate a substantial amount and can increase the amount you hold back. Here’s a calculator that can tell you how much you need to put aside each month to reach a savings goal.
Keep track of your expenses. Make a spreadsheet of all your monthly expenses, including rent, groceries, gas, utilities, and credit card payments. Now that you know how much you spend each month, you can create a budget and stick to it. Keep a cushion for unexpected expenses or an occasional night out, but identify items you can do without and save what you have left. Apps can also help you track your expenses.
Open a 401(k) with your employer. Many companies offer 401(k) retirement savings plans as an employee incentive. A 401(k) is a qualified profit-sharing plan allowing employees to contribute a portion of their wages to individual accounts tax exempted. The employers may also match contributions.
Open a savings account. Once you determine how much you can comfortably save every month, open a savings account to put it to work and earn interest.
Different types of savings accounts
There are different savings accounts, from traditional savings accounts to certificates of deposits and money markets. Which account is right for you depends on your situation and how much you can invest.
Savings accounts- A savings account allows you to safely store your money in an FDIC-insured bank while earning interest. You can have limited access to the account for withdrawals and transfers. While savings accounts offer many advantages, such as low fees, low minimum balances, and easy access, they usually offer the lowest interest rates. Accounts are also limited to six transfers/withdrawals per statement cycle and most institutions may charge a fee for exceeding that limit.
Certificate of deposit-A certificate of deposit, or CD for short, is a bank account that offers higher rates over a fixed term. The longer the term, the higher the rates that are offered. While the rates offered are higher than traditional savings accounts, you cannot access your account during the CD term, and there is a penalty for early withdrawal.
Money Market Accounts- A money market account offers higher rates than a traditional savings account and allows easy access to funds, much like a checking account. Money markets require high initial deposits and ongoing balances, or fees will be incurred. Like savings accounts, money market accounts are also limited to six transfers/withdrawals per statement cycle and a fee may be incurred for exceeding that limit.
Use National Savings Day to start a savings plan, and reap benefits of reaching your savings goals. If you need help with starting a savings account or have questions, click here or give us a call at NASB at 800-677-6272.
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