1. Save Automatically
Save automatically through a monthly transfer from checking to savings, ideally soon after you are paid. What you don’t see, you probably won’t miss. These savings will provide funds for emergencies, home purchase, school tuition, or even retirement. Almost all banking institutions will, on request, automatically transfer funds monthly from your checking account to a savings account.
2. Save for Emergencies
Having an emergency savings account may be the most important difference between those who manage to stay afloat and those who are sinking financially. In fact, low-income families with at least $500 in an emergency fund were better off financially than moderate-income families who saved less for emergencies. Without an emergency savings, you may find the need to turn to high-cost credit cards or payday loans to cover the amount you owe. Borrowing from these types of lenders could make it difficult for you to payback your debt and save successfully. Start with an emergency fund goal of $500.
3. Pay Off High-Cost Debt
The best investment most borrowers can make is to pay off consumer debt with double-digit interest rates. For example, if you have a $3,000 credit card balance at 19.8 percent, and you pay a minimum balance of 2 percent, it will take 39 years to pay off the loan and cost more than $10,000 in interest charges.
4. Save for Retirement
Few people get rich on wages alone. Wealth is built by consistently saving and earning compound interest, or interest on your interest, over many years. Saving now for retirement will ensure that you have enough money to live a comfortable lifestyle when you stop or reduce the amount of hours you work. And the earlier you start the better, ideally in your first job when time is on your side. But saving for retirement is important at any age, and it’s never too late to get started. You may be able to save for retirement through your workplace through a 401(k) plan or you can save on your own by putting money in an Individual Retirement Arrangement (IRA).
5. Make a Plan
Those with a savings plan are twice as likely to save successfully. That’s where America Saves comes in. We’ll help you reach your savings and debt reduction goals when you make a commitment to yourself to save with the America Saves Pledge. Together, we’ll choose a goal and amount to save monthly. And it doesn’t stop there. We’ll keep you motivated with information, advice, tips, and reminders to help you reach your savings goal. Think of us as your own personal support system.