(InvestigateTV) — Bankrate reports that 27% of Americans have no emergency savings, but there are easy ways to start a savings plan.
When it comes to saving, the rule of thumb is to save 20% of earnings. If that’s too high, start with 10%.
And if that is not attainable, try setting aside $10 or $20 each paycheck.
Cherry Dale, a financial coach with the Virginia Credit Union, suggested opening up different accounts for different savings goals. It could be a new car fund, a Christmas gift fund, and an account for saving for a vacation.
Dale said to really look at the interest rate as a benefit for those savings accounts.
“Disconnect your savings account from your primary checking account. So, it’s not as easy to transfer that money over,” she advised. “If you get in a pickle at least there’s a little bit of a barrier there, if you do need to transfer the money.”
She said once you set up different savings accounts for different goals, make those savings automatic, so it just comes directly from the paycheck.
“Maybe it’s retirement, it’s automatically going into your 401(k). You’re still saving for that emergency fund, $20 into that emergency fund,” Dale noted. “Christmas shopping, start saving for that. You could open up a savings account. Now some financial institutions do charge for savings accounts, so you want to understand the fees that might be associated with that.”
Dale said also think about savings certificates, which is what credit unions call them, or certificates of deposit, which is what banks call them. This commits money to a 6-month CD or savings certificate and the interest on that account typically will be higher than interest on a regular savings account.
The money is locked in for whatever time frame is initially picked.
The longer you lock in the money the more the balance will grow over time.
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