It's important to get into good savings habits even if you don't have a lot to save. If you get into the habit of depositing part of your money into savings regularly, you will be on your way to developing good lifelong savings habits. Often, people call this "pay yourself first." This means to deposit money into your savings account before spending it on something else.
Saving For A Goal
Have you ever had to save your money to buy something you really wanted? Once you saved the money, it felt great to be able to buy the thing you worked hard to save for, didn't it?
There are lots of ways to save money, and it is important to understand all the different ways as you save for big things, such as college, your first car or other important saving items. Saving at your credit union can be done in a variety of different accounts. The higher the interest rate the better it is for you because you earn more interest income on your savings.
Possible ways to save include:
- Regular Savings Account (Share Account) - deposit any amount of money and earn interest on your deposit.
- Certificates - deposit your money for a set period of time at a higher interest rate.
- Money Market Account - usually requires a higher deposit and pays a higher interest rate than a savings account.
It may be helpful to save your money in more than one place. Save for short-term goals (less expensive things) in your piggy bank or a jar at home. This savings would be for things like music, a trip to the movies, or a new book you've been wanting. You may want to have more than one piggy bank or jar to save for different short-term goals. Save for long-term goals in a Savings, Certificate, and/or Money Market Account the credit union. Long-term goals are the more expensive things, such as college or a car.
Try to put a portion of all the money you get in your long-term savings! Set up a savings plan and stick to it. Saving money is not hard if you make it a habit!
Your Savings Account Earns You Money
Take advantage of your savings account ... it's working for you all the time! You earn interest (also called dividends) on the money in your savings account. Interest is the money paid by the bank or credit union to the account owner for their deposits. The amount of money you earn depends upon the interest rate applied to the account where your money is stored.
You earn interest on the balance of your account. That interest is added to your account balance, making your account balance grow. Interest is then earned on the new higher account balance, and so on. This process is called compounding. The more often interest is compounded, the more money you'll earn. Interest on savings accounts is typically compounded daily.
Tips for Saving
- Set a reasonable savings goal. If your goal is not reasonable, you won’t want to stick to it.
- Make savings easy to do. Set up automatic deposits to your savings account if possible.
- Increase what you save when possible. If you get a raise, increase your savings!
- Save your change and deposit it in your account periodically. Change really adds up!
- Put your savings in an account that is not easily accessible. If not, you will be tempted to “borrow” from your savings fund.