Written by: Pier Alsup, American Eagle Credit Union, Chief Community Engagement Officer
Have you heard of “America Saves Week”? It is a yearly highlighted week that credit unions, banks, nonprofits and other institutions nationwide bring awareness to the importance of saving. What is a better time to discuss savings goals and more importantly the different types of basic savings accounts that can help you achieve your goals?
Here are a few savings tips to keep in mind:
People with a plan to save are twice as likely to save successfully.
Remember this: no matter what you are saving for, it’s important to: (1) set your savings goal, (2) make a plan, and (3) and select an account that will allow you to save in the most effective way.
Make sure to set your savings goal.
This is as simple as identifying what you are saving for: Emergency fund, new car, new home, getting out of debt, vacation, college education, retirement, etc. Know what you need to save for so that you can create a plan.
Make a plan.
Ask yourself: How much do you need to save? How long do you have to save that amount? Then plan accordingly.
Select the account that’s best for your goal and plan.
Savings account types include:
- Basic Savings Accounts
- Your savings are separate from your checking account, so you limit your access and will be less tempted to spend.
- Earns interest
- Great for short-term goals like a new laptop, weekend getaway or emergency funds
- Your savings are “committed” for a specific period of time (6 months, 1 year, 2 years, etc.)
- Earns interest and rates tend to be higher than those paid on savings accounts, but you can access the money only after the term of the CD has expired. If you take out money prior to that, there will be penalties.
- Great for longer-term goals like college education funding and retirement
- Money Market Accounts
- Savings account that often has some check writing capabilities
- Earns interest … rates tend to be higher than standard savings but lower than CDs, and may require a higher minimum balance.
- Great for a variety of goals, including saving for a new car or home
Keep in mind Pier’s Pro Tips:
As a rule, make sure that you pay yourself first and automate your savings. This means that you automatically have your savings withdrawn from your funding source such as your paycheck, so that you don’t even have to think about it. You can easily do this with your direct deposit.
We want you to know—saving money doesn’t have to be scary or super difficult. When informed and when savings happens consistently, it can help you truly be prepared financially.
Visit AmericanEagleCU.org for more saving and financial tips.