We have discussed a lot of topics relating to Financial Literacy Month on our Facebook page and in previous blog posts this month. One topic we haven’t yet touched on is saving money, a skill that most adults in the United States appear to have trouble with.
It is estimated about one in three U.S. adults don’t have readily accessible emergency savings. That’s approximately 72 million people. Why? Probably because we all think saving is hard. We view saving as a sprint to a magical goal, rather than the marathon of small, consistent contributions it actually is.
However, saving is important, easy and necessary for the financial success we crave.
Importance of Saving
Saving money isn’t all about accumulating as much money as you can. It can help you achieve short and long-term goals. Saving can also help ensure you are prepared for emergencies.
For our purposes today, let’s focus on what it takes to create an Emergency Fund so that you have enough money saved for “rainy day.”
Step 1- Open a Savings Account (If You Don’t have One Already): by opening a savings account you are separating this money from what you’ll use for purchases. Choose your savings account based on the following factors:
- Fees and limitations– most savings accounts of restrictions on minimum balances and withdrawals. Be sure you know what these are.
- Interest- this allows your money to work for you. A general rule is that the higher the interest rate, the higher the minimum balance you’ll have to keep in the account.
- Accessibility- can you withdraw or transfer your money at any time, or are there limitations?
- Benefits– can you access your money through ATMs, Online Banking or Mobile Banking?
Step 2- Set Your Savings Goal: an Emergency Fund should cover three to six months’ worth of expenses in the event you lose your job or become temporarily disabled. Once you have your overall goal, set smaller goals to better gauge your progress and to make the task of saving seem less daunting.
Step 3- SAVE! Transfer your set amount from your checking account to your savings account every time you get paid. Better yet, use Online Banking to set up a recurring transfer for this amount to occur every payday. This helps in two ways: 1) it ensures you are actually saving, and 2) it eliminates the chances of you deciding to use that money for something else.
As your local community bank, Timberwood Bank tries to make saving easy. Our savings accounts offer the tools necessary to help you make steady contributions and reach your savings goals. You can apply for your savings account using our online Deposit Account Application or by coming by our office in Tomah.
Timberwood Bank, member FDIC