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Rather than purchasing on credit, consider planning ahead and paying for the item outright. There are numerous ways to save. A good place to start is with a basic savings account.
Open a Savings Account
A savings account is a great place to put your money. You have many options to choose from.
Direct Deposit Gets You There Faster
One tried-and-true way to save money is to use Direct Deposit to send a portion of your pay directly into a savings account. This out-of-sight, out-of-mind approach helps keep you from feeling tempted to spend the money. And if the budget's tight, it's okay to start small. Even $5 each week is a perfect start. The point is to start saving—now!
But at some point, you're probably going to want to get a better return on your savings. You'll want to start thinking about certificates and IRA's, which provide advantages that a savings account doesn't.
- Generally pays higher interest or dividend rates than regular savings accounts.
- Requires you to open or "purchase" a certificate for a specific amount of time. You cannot withdraw the money during that time without paying a fee.
- Often requires a minimum deposit to open.
- Money is able to be withdrawn or moved into another certificate once it matures.
- Generally provides tax advantages.
- Does not require a minimum deposit to open.
- Excellent approach for retirement, as you cannot withdraw money until age 59½
Start Small. Start Saving.
One tried-and-true way to save money is to use Direct Deposit to send a portion of your pay directly into a savings account. This out-of-sight, out-of-mind approach helps keep you from feeling tempted to spend the money. And if the budget's tight, it's OK to start small. Even $5 each week is a perfect start. The point is to start saving—now!
Experts recommend establishing an emergency fund that equals a minimum of three months' salary. This fund can be used for unexpected auto repairs, medical expenses, or living expenses should there be a disruption in your regular income. (Just remember to replenish the fund if you ever borrow from it!) And remember, if you come into a large sum of money like a bonus or tax return, consider saving the majority rather than spending it.
10 Ways to Get Into the Savings Habit
Need to set up an emergency fund (a minimum of three months' pay)? Pay off debt? Save for a new car? Pay cash for all holiday gifts? Retire at 50? It's easier to get somewhere when you know where you're going.
Pay yourself first
Determine what you can put in savings, then budget to live on what's left.
Use Direct Deposit to save systematically by assigning a portion of your net pay to your savings account. Many find this "out-of-sight, out-of-mind" method to be pretty painless.
Look for "found" money you won't miss it because you haven't been seeing it anyway, redirect to savings the payment for a paid-off car loan, deposit pay raises and bonuses in savings
Separate Your Accounts
Always keep your savings a little out of reach in a separate account from your checking.
Save Your Change
Don't spend the coins you receive as change from a purchase. Collect them over a period of time, then deposit in your savings.
Likewise, set aside the money you save with cents-off coupons.
401(k) and Thrift Savings Plans
Contribute as much as you can to your 401(k) or Thrift Savings Plan. At a minimum, save enough to get your employer's full match—it's like free money!
Earn More Interest
Upgrade to a higher interest-earning account. Certificates generally pay higher dividend rates than regular savings accounts. Some have minimums as low as $100. Earnings are guaranteed and insured up to $250,000 against loss by the federal government at most financial institutions.
Stocks and Bonds
Consider stocks and bonds (start with mutual funds) to earn greater, but not risk-free, returns.
Getting From Here to There
So what do you want to buy? Let's see how much you'll need to save to get from here to there. Move the sliders to find out how much money you need to save each month so you can reach your goal.