Every person has a unique financial situation, but that doesn’t mean you’re alone on your journey to financial wellness. One common goal we often hear from our members is the desire to save more. It’s always a good idea to review your expenses for opportunities to cut back. But you might be overlooking other easy ways to save. So how do you set a savings goal and work toward it? And what tools or resources can help?
Remember that your savings are only one piece of your overall financial health. Take a step back from the numbers and think about your short- and long-term goals. Consider why you want to save and how these savings will help you reach your goals. Then, check out our ideas on how you can start saving more money.
Remember, if you need help along the way, you can always connect with our Financial Life Planning team or our partners at GreenPath Financial Wellness1.
Make A Budget Every Month
To build a solid foundation to support your goals, you need to create a budget each month. A budget can help you visually see where your money is going every month and keep your spending and saving balanced. You can use the free budgeting option in Online Banking, a personal finance app, or just a pen and paper. Here are a few steps to start:
- Determine your average monthly household income
- Create categories for expenses you know you have every month: Rent/mortgage, utilities, groceries, loan payments, etc.
- Look at a calendar and consider potential expenses in the month ahead: Birthdays, holidays, insurance premiums, seasonal costs, etc.
- Plan to save by adding a savings category to your budget
- Add categories for fun activities too: Entertainment, dining out, travel, etc.
It may take a few months to get the hang of budgeting and find a method that works for you, so don’t give up if your first month is a challenge. If you need help, try using our free budgeting worksheet. And check out our article on how to create (and keep) a budget.
Create Specific Savings Goals
It's easy to give up on saving if you don't have a specific goal in mind. Making your goals specific encourages motivation. It’ll also help you break down your goal into smaller, more achievable steps. Everyone wants to save more money. Consider why you want to save. What do you want the result to be?
A specific goal might sound like this: I want to save $3,000 in an emergency fund by June because this amount covers three months of my expenses in the event of a potential job loss or medical emergency.
A savings goal might also include paying off smaller or short-term debts. With fewer payments to worry about, you can build your savings or put more money toward larger debts, like a mortgage or student loans, each month.
Business owners should actively create savings goals too. It’s important to have accessible funds in the event of an emergency, repair, or to respond to changing market conditions. Think about the future of your business too. How do you see your company growing and expanding over the next few years?
Keep Lifestyle Inflation In Check
If you get a promotion or raise at work, it’s easy to fall into the habit of spending more. While a small reward for your hard work is fine, consider your financial goals and how you feel about your situation before you make any big changes to your spending habits. Could you contribute more to your emergency fund? Would it be beneficial to make additional payments on any loans?
According to the latest Report on the Economic Wellbeing of U.S. Households by the Federal Reserve Board, 25 percent of non-retired adults had no form of retirement savings. Though most adults did report having some funds saved for the future, only 36 percent of those savers stated that they thought their retirement savings were on track.2 So, when your income increases, review your retirement plan. Consider contributing to an account, like a 401(k) where you may have tax advantages or receive matching funds from your employer.
Use Bill Pay Reminders
When life gets busy, it's easy for a bill to slip your mind. Late bill payments can affect your credit score. And you’ll often get hit with expensive late-payment fees. Set any recurring payments on autopay, create Bill Pay reminders, or use a calendar to write down when bills are due so you don't miss any due dates. You can also schedule bill payments in Online Banking and Business Online Banking. Just remember to review each payment statement to look for errors.
Keep Track Of Your Credit
Having a healthy credit score could help you save on your next insurance policy or help you get a lower rate on a loan. And your credit score doesn't just impact your financial life; your landlord or a potential employer may check your credit history before deciding to work with you.
Your total debt, the length of your credit history, the type of credit you have, and your payment history are all factors that impact your credit score. Get a copy of your credit report and check it for errors or potential fraud, which can also impact your score. You're usually allowed to request one free credit report every 12 months from each credit reporting agency: Equifax, Experian, and TransUnion. However, due to the COVID pandemic, you’re now allowed to get one free weekly report from each agency until April 20, 2022.
If you own a business, your personal credit score can have an impact on your business. This important number plays a big role in the business lending process, so it’s important to monitor your score. You can learn more about credit scores and your business in our business membership booklet.
Look To Your Home For Savings
Housing expenses, including rent/mortgage, utilities, and insurance, can easily take up a big part of your budget. If you plan to stay in your house for at least a few years, you may want to consider refinancing your home. While refinancing does have some upfront costs, it could help you save on your monthly payment or save on interest over the life of your loan.
If you’re not ready to refinance or if you rent, it may be worth a conversation with your landlord or lender. Can you drop the private mortgage insurance (PMI) from your mortgage payment each month? Could you help with any maintenance on your rental unit to reduce your payment?
Review Your Insurance Options Every Year
Before renewing your auto or home insurance policy, take some time to review your coverage and shop around. If you haven’t reviewed your policy in a while, you may be overpaying for coverage or be paying for a plan that no longer fits your needs. Get an insurance quote3 each year to see if you can get better coverage or a cheaper rate. And don’t forget to ask if you qualify for any additional discounts.
Let’s Work Together
With some ideas on how to save in mind, it’s time to make a savings plan that works for your lifestyle. Like any new skill that you learn, it takes patience and practice to save money. As a partner on your financial journey, remember that we’re here to help if you have any questions or need some guidance. There’s power within you to achieve your goals. And we believe in you.