February 12, 2013
By Cathy Moss, AFC®
The benefits of saving can be worthy of excitement but the process to get there may not be as thrilling. This is why saving systematically is probably best done automatically. Out sight out of mind may be one of the best approaches to saving consistently. How can we accomplish this? One way is to set up an automatic transfer bi-weekly or monthly from your checking account to a savings account at your bank. But this probably allows easy access to dip into savings. So, in our family we have a savings account with a credit union that is not easily accessible. The money is allotted directly to the credit union savings account… out of sight out of mind. Allotments are easy to start via myPay or through your employer’s HR department.
Things to consider
If you are considering opening a savings account with a credit union or bank you have not dealt with before, remember a few things:
· Bank or Credit Union? Credit Unions are non-profit and usually offer better rates, personalized service and other little perks versus banks. But banks may offer more robust services to make your banking experience easier/more accessible.
· No matter which you choose, remember that Credit Unions should be insured by the NCUA and banks by the FDIC.
· Is there a minimum balance requirement or a minimum amount for each deposit?
· Do I need to open a checking account or some other account to have a savings account?
· What fees are associated with this savings account?
· Lastly always read the fine print.
This may appear to be a laundry list of things to consider, but once you obtain the information about the savings account, these and other questions are easily answered by skimming over the information.
Can You Save More? Don’t Just Set and Forget
It is a good idea to review your monthly expenses. When my husband and I realized how much we had after paying our bills, we restricted discretionary spending by packing lunch and limiting shopping sprees so we could save more. After honestly assessing what you can place in savings bi-weekly or monthly, set up the allotment and forget about it. But after a few months you may want to re-assess whether you can do more without negatively impacting your budget.
With any additional income (tax refund, annual raise, bonus) consider increasing your savings allotment. Some people use most to all of the increase to place in savings. In our household, we use one third for savings, one third for debt and the last third to save for something we would like to do in the near future.
Remember, be honest with yourself and do not shortchange your savings; because when you do, you are only shortchanging yourself.
Think you can’t find the money to save? We can help. Find tips on saving and paying down debt at www.MilitarySaves.org. Take the Military Saves Pledge today.
For more information:
Make Your Savings Automatic
New Year’s Saving Resolution #2: Save Automatically
Saving on a Tight Budget