Savings & Investment

How to Save Money Using Your Savings Account

You have been there and done that when it comes to savings. You have tried to save money but when you see a great pair of shoes, you take money out of your savings because you really, really want them. We all have been there. You mean to start all over every time and still your savings balance looks more like an area code and less like a zip code.

One of the pithy maxims that we all hear now and then, says that you should have six months of emergency money socked away. For your savings, it is like six days of saving.

You recently read an article about the reasons people should save money. You learned that they include having a safety net, as mentioned above, and meeting your life goals. Other reasons to save include having a safety net in case something goes wrong with your job. Having some money in the bank, in case you lose your job, or you want desperately to leave your current job, is a cushion we all need to have in today’s volatile employment world.

If you save money in a specially designated retirement account, like a 401(k) or a 403 (b) in the non-profit world, there are distinct tax advantages for you. Many times, your employer will provide a percentage of your salary for your retirement savings, or they will match a percentage of what you put in one of these accounts. When they give you what is found money, it is to your advantage to take them up on that. Your share of the money comes out of pre-tax dollars, so it’s a win-win situation, all around.

Another reason to save is that when an amazing opportunity comes up, like those gorgeous shoes, or a weekend trip to the Bahamas with the girls, you already have the money put away. This comes with a warning though, if all you do is withdraw from your savings for everything you see, that money will disappear quickly. That will leave you nothing for the next terrific opportunity.

One final formidable reason to save. Do you ever feel stressed about money? Who doesn’t? You wouldn’t be a normal person if money didn’t stress you out. But, if you have money put away, you will sleep better at night.

But how do you do that? Some people are lucky because they were introduced to the concept of savings as a young person. In many families, things like birthday money or holiday gifts of money are automatically put into a savings account. You might get a percentage of it to spend, but building on that habit is a wonderful way to reinforce the habit of savings. If you got an allowance or were paid to do chores, saving some of that money is also a great start on your future.

One advantage to savings that was not yet mentioned is another important way that your savings can work for you. If you attend a religious service, or volunteer at a special charity, you will have some extra money to make donations to your favorite cause, when they need help. That can be an awesome feeling.

Now that you know the reasons why, you may need help with the how. In an ideal world, everyone would be born with, or raised with, the habit of saving money. This, however, is far from that world. In the real world, savings is hard. In today’s retail economy, you do not even have to go to a brick-and-mortar store to spend money. Just use your phone and the retail world can come right to you. Every few minutes a great bargain screams for you, right in your hand. That is a temptation that is extremely hard to overcome. Many people have FOMO, or fear of missing out, and cannot avoid that hot deal that only lasts for the next 15 minutes.

So, how do you even try to not to run up your credit card bill, when spending is so easy? There are a few tried and true methods that have worked for people that are even easier to do today than in past generations.

Here are some easy steps and suggestions you can take to start saving more money. Today, it is very easy to open accounts at online banks. Ask around your family or close friend group to see which online banks people are using and how they feel about their bank. It is easy to set up separate accounts at one of the online banks. You can set up savings accounts or if you have more money to spare, money market accounts, that come with withdrawal and transfer privileges. One account for each separate thing for which you are saving. As an example, one account for trips, one account for holiday gifts, another account for that beautiful and seriously expensive handbag that you see yourself with in a few years.

Then, after each deposit sent to your main account, before you do anything else, you allocate a specified amount to go to each one of the accounts you have opened. Starting with as little as five to ten to twenty dollars at each pay period, make a deposit into each. Then with compound interest, your money will grow with each deposit. Perhaps as you see those numbers go from an area code like number to more of a zip code related number.

Savings is hard, there is no question about that. Almost everyone can relate to that. The efforts you make will be rewarded in the future, teaching you to defer your pleasure for the bigger goal. Then, imagine yourself on a sunny beach after saving up for that glorious Caribbean Island vacation. This reinforces the principle that a deferred pleasure lasts longer in your memory than running out and immediately satisfying your desires for new things.

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