Get Going – It’s “America Saves Week”
- February 22, 2021
- By: Greenpath Financial Wellness
It’s a good time to take a look at your savings plan as a way to recognize “America Saves Week” — an annual call to action encouraging people to commit to saving money.
While many of us know the importance of building up our savings, it can be helpful to revisit why starting a simple monthly savings plan – no matter the amount – pays big dividends.
Some of the most important reasons to save money include:
- Preparing us for emergencies: Setting aside a set amount each month helps protect us in the event of a financial emergency. Perhaps it’s a surprise medical bill, car repairs or temporary loss of income. There are many reasons why an emergency fund is critical to prepare help handle unexpected expenses. Plus, building up emergency savings to cover unexpected expenses is better than using high-interest credit cards or taking out a loan. An emergency fund gives you peace of mind and prevents you from going into debt.
- Setting us up to manage planned expenses: For those anticipating making large purchases, saving money can help us prepare our budget to pay for expenses that we plan to take on – such as a down payment on a car, planned home maintenance or an upcoming vacation. Here again, by saving up for planned purchases, we can avoid the use of high-interest credit cards or taking on other debt. When you plan ahead to save for those large purchases, you take control of managing your monthly income.
- Reducing stress: Financial stress is real. It’s stressful when we’re faced with bills and expenses that we struggle to pay each month. In fact, many researchers see a significant connection between financial stress and mental health and well-being. Especially during the ongoing pandemic, financial strain is felt by the newly unemployed or furloughed as well as those still working but facing an uncertain future. The uncertainty, with new quarantine measures and social tumult, has mental health professionals noting that the holiday season might be much more challenging this year for many of us. When you build up savings, you end up reducing the stress many of us feel when it comes to our finances.
- Providing a sense of freedom: Gaining a sense of freedom might not be the first reason that comes to mind as a benefit of setting up a savings plan. Yet many of the people who contact GreenPath Financial Wellness report enjoying a sense of improved freedom and flexibility after building up savings, no matter how much the amount. Even setting aside $20 a paycheck is proven to improve a feeling of freedom due to the “buffer” savings provide. Knowing that savings “nest egg” exists gives people the freedom to choose how to handle their finances, rather than feeling stuck in a particular situation.
Given the many reasons to save, getting started is simpler than you think.
1. The first step starts with assessing your budget. Get a handle on your monthly income and typical expenses, including credit card debt or other loan payments.
2. Once you have a complete picture of monthly income, expenses and debt, consider how much you can set aside each month to build up savings.
3. How much you set aside depends on your financial goals. For instance, if planning for a large purchase, break down the amount over a 6 month or 12 month period, and automate savings to meet that goal.
4. Automating savings deposits makes it more “painless.” You’ll be able to set it and forget it, by paying yourself first through automated savings.
5. Make sure you’re maximizing the interest you’re earning by getting a competitive annual percentage yield (APY). Consider a money market or other higher interest account.
6. Finally, make it a family affair. Set a savings goal with loved ones lets you come to a consensus about goals and dreams. That way, it is easier for you all to plan and encourage each other to save for emergencies, planned expenses or other goals.
This month’s America Saves Week is a great time to remember that it’s within reach to improve financial stability.
GreenPath offers free financial counseling and education to support people in meeting their financial goals. Our professional, caring financial coaches will work with you to assess your situation, explain the options or solutions available, and help you create a spending plan to meet your goals.
Call us today! It’s free, confidential, and no pressure.