Many people across the country and around the world learned the importance of having a savings to fall back on when facing the unknown during the COVID-19 pandemic.
When it comes to saving, many experts recommend having enough money on hand to cover three to six months of living expenses in case you face a job loss, cut in hours or pay, or unexpected expenses like medical bills. If making a budget, you may want to try the 50-30-20 plan that helps you stock away 20 percent of your earnings for savings and investments, including retirement.
How do you meet this savings target?
Read on for a few tips on building your budget, changing some of your spending habits and setting savings goals.
Build your budget
- Review and track how much you earn and how much you spend: The first step in your savings journey is better understanding your earnings and your expenses. Start by making a list of your approximate monthly expenses, making sure to break them into different categories so you can see where your money goes and where you could make cuts.
- Find a budgeting app or create a budgeting worksheet to document your typical monthly income sources and expenses: WaFd Bank offers MoneySync, a free online app-based budgeting tool where you can track your spending.
Make changes to spending habits
- Take your time to make big purchases: Give yourself at least a day before making any large purchases. This will give you time to make sure you are not just making an impulse buy. It also gives you an opportunity to research the product and comparison shop.
- Match your splurges with a contribution to your savings: If you end up buying something you may not need, try depositing the same amount you spent on that item into your savings account.
- Pay bills through auto-pay: By setting up automatic payments, this will ensure you pay your monthly bills on time and avoid any late fees.
- Only use ATMs associated with your bank: Check with your bank to find fee-free ATMs and avoid paying unnecessary transaction fees to other banks. WaFd Bank offers more than 32,000 fee-free ATMs.
- Manage your credit card debt: If possible, try to pay off your credit card bill each month to avoid paying interest. If you cannot pay off your credit card, commit to paying a certain amount toward your credit card each month to get closer to becoming debt-free.
- Avoid spending temptations: Unsubscribe to emails from your favorite stores so you are not tempted to buy something you may not need.
- Find inexpensive activities and entertainment options: Check event listings in your area to see if there are free or low-cost things to keep you busy. In need of entertainment options like books or movies? Check out your local library branch.
- Pack a lunch and make your own coffee: Shave off a few more dollars a day by bringing your lunch and filling up your travel mug before heading into work. This could easily save you $10 to $15 per day or more.
- Trim your dining-out budget: Eating at restaurants or getting takeout can get pricey. Cut down on these costs by committing to dining out one less time per month.
Set your savings goals
- Start small: Building your savings does not have to happen overnight. Set small goals like saving an extra $25 or $50 each month. As you cut costs in other areas, stock that money away in a savings or investment account. Consider setting up automatic transfers from your checking to your savings account each month to ensure you meet your savings goal.
- Save for retirement: It's never too early to save for retirement. If starting a new retirement account, make sure to do your homework since there are different rules and restrictions for each type of account. WaFd Bank offers two types of Individual Retirement Accounts (IRAs) - traditional and Roth.
Need help managing your money?
We're here to help. Visit wafdbank.com to open an account today, or call us at 800-324-9375 to learn more. Interested in opening a savings account? WaFd Bank's savings account options require just $25 to open an account (only $10 if under age 18)*
*Savings: $3 Per Month for balances below $100, Free for minor accounts up to age 18.
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