Do you remember your parents storing their “mad money” (essentially their emergency fund) in a cookie jar? Remember your first piggy bank? Maybe it was a spreadsheet or piece of software that separated your savings into different categories. Wherever the money was stored, the idea was simple: Keep squirreling cash away and someday you’ll have more of it, ideally to cover something big.
Today, anyone with a piggy bank, savings account or an IRA knows having savings is a smart move. However, the specific ways we save are often not laid out in easy to understand ways. In an age of diversifying your assets, saving in specific categories with specific goals not only makes saving more effective, but more useful — with plenty of gratification built in. Here are a few avenues to consider for expanding your savings horizons.
Save it and forget it
Right off the top each month, consider making yourself the first bill you pay. Contribute to your workplace retirement plan and take advantage of any employer matching. Consider opening an IRA for additional retirement savings if you’re eligible, or open a share account you can fund with an eye to the future. Sign up for direct deposit, so your designated savings goes right into an LGFCU Deposit IRA or LGFCU Share Savings Account automatically, making saving effortless.
Save it and use it
Once payment obligations are out of the way, your savings diversification can get to work. Start saving for things you want, such as a new house or a vacation. Collect loose change then periodically exchange the coins for cash that can be deposited into your Holiday Cash Club Account to help pay for holiday gifts. Put off buying a new car for one year, but start making the payments to yourself.
Save it and grow it
Figure out what categories in your budget can afford to be tightened a little more. Then consider taking that extra money and putting it toward more aggressive savings vehicles that could bring high rewards. Doing this could mean having a luxury later like retiring early or buying a vacation home.
Save it and rely on it
The biggest threat to the success of any financial plan is adversity. When bad things happen like losing a job, facing an illness or a major car repair, we often rely on credit to survive. This temporary fix delays the pain and hinders our ability to bounce back quickly. However, an emergency fund of three to six months of total expenses could reduce the need to rely on credit. Instead of plastic, build a savings cushion to use as an emergency fund. Once it’s in place, leave it until it’s needed and then use it with peace of mind.
Savings doesn’t have to be the boring act of simply moving cash into a place where you “can’t touch it” as the old saying goes. Instead, put your fingerprints all over it to grow it and use it when necessary. Even if the amounts are small at first, the practice will build over time and you’ll create an ever stronger financial foundation. Visit your local branch if you’re ready to open a Deposit IRA or Share Account.
Additional content courtesy of Brass Media