If you’ve ever been tempted to dip into your savings due to financial challenges, or if you’ve actually done so, know that you’re not alone. The recent economic downturn has forced many American families to make tough choices about how to use their savings or emergency funds. Let’s explore five strategies to safeguard your savings and make them work harder for you in these difficult times.
1. Create a Budget:
Creating a budget is one of the most effective and affordable ways to save. Begin by itemizing every expense over several weeks or a month, then assess what you can reduce or eliminate. You might be surprised how much you can save by curtailing unnecessary spending, which can free up cash and prevent you dipping into your savings.
2. Open a High Yield Savings Account:
Following the “out of sight, out of mind” principle can work in your favor when saving. Storing your savings in a separate high yield savings account, away from your everyday checking account, can curb the temptation to spend. Furthermore, some investigation might reveal better account options with higher APYs, leading to greater savings.
3. Consider a Certificate of Deposit (CD):
A CD can be another effective tool in resisting the temptation to spend savings. The key difference with a CD is that you commit to not touching your funds for a specific period. In that time, your money is invested in safe options and insured by the FDIC, usually with a fixed interest rate. The interest rate is typically higher than most savings accounts due to the slightly increased associated risk.
4. Open a Free Checking Account:
If you’re paying for your checking account, now’s the time to switch to a free one. Today, there are plenty of excellent free checking account options. Assiduous research can help you find one that meets your financial needs. You could save more and potentially earn from the various incentives some institutions offer.
5. Remember Your Goals:
Easier said than done, but simply reminding yourself of your saving goals can be a powerful deterrent against impulsive financial decisions. The next time you contemplate withdrawing from your savings, think of the impact on your children’s future or your own life goals. Your hard-earned savings should be your last-resort funding, not a first option.
In an ideal world, we’d all want to stretch our money further every day. But life’s unexpected expenses can make this challenging. Nonetheless, these five strategies can guide you towards better financial management, fostering savings growth. Hopefully, these tips will help you make wise financial decisions and set you on the path to increased spending efficiency and robust financial health.
