When you are younger, saving money for your future such as kids, purchasing a house, or retirement may seem like the last thing you need to worry about. According to new data from Nationwide, “A good 25% of millennials worry about saving enough money for their senior years. That’s a valid concern since retirees without savings risk struggling financially.” In a time where many Americans are struggling from paycheck to paycheck, saving for the future may seem impossible. Continue reading to learn more about easy ways to save money.
Starting Out
Getting into the habit of saving money can be tricky when you are first starting out. The best first step you can take is creating a budget for yourself. Having a budget you can follow helps you make realistic decisions about how you spend your money, and can also show you where your money is going. Do you really need everything you are paying for on a monthly basis? For example, cutting back on the number of streaming services you use, or finally canceling the membership to the gym you haven’t visited in 3 months. If you are married or living with someone, you should work together on establishing a household budget. You both should be on the same page about your future goals and how you plan to get there. Not sure where you should start? Here is a great resource for creating your own personal budget. Make sure you have a set amount in your budget for savings each time you get paid. Even if you have to start out only saving $25 per paycheck, something is better than nothing.
Savings Account Options
Having a savings account is a good way to prepare for the future. When selecting a savings account for you or your future family’s needs, it is important to consider how you want your money to work for you. There are multiple options available when searching for the perfect savings account:
- Regular Savings Accounts: These types of accounts are fairly simple to understand. They typically have a lower, steady interest rate. These types of accounts are ideal for people who are saving for short-term goals or may need to withdraw money from savings periodically. These accounts also usually only require a small minimum balance.
- Money Market Savings Account: Money markets are different than standard savings accounts for a few reasons – the first being interest rates. Money markets typically pay higher rates of interest than standard savings accounts. Access for these accounts is more rigid than regular accounts. However, these types of accounts usually offer checks or a debit card to utilize funds from the account, just on a more limited basis. Usually, the limit is around 6 withdrawals per month. If exceeded, you may face fees. The same can be said for maintaining a minimum balance. They typically require a minimum balance of $1000 to keep a money market account open. This account would be best for those who are not as concerned about using money from their savings and have a good chunk to put away.
- Certificates of Deposit (aka CD’s): CD’s tend to pay the highest interest rates out of these 3 options. With higher interest rates comes more restrictions. When opening a CD, you must agree upon an amount of time to let your money sit. During this period of time, you cannot access any of the funds in the account. If you must take the money out early, you will likely pay an early withdrawal fee. These types of accounts are best for people who have a good amount of money to save and are looking to earn even more interest on funds that they will not need for an extended period of time.
First National Bank is a great local source to start saving for your future. You can see all of our current savings account interest rates here.
Preparing Your Family For The Future
You can start preparing your children for their futures at an early age. Teaching children about the importance of want vs. need spending and saving for their future goals is the best way to ensure your child can be financially independent in the future. Paying your children a weekly allowance is one of the easiest ways to teach them about budgeting and saving for things that they want. Giving an allowance in exchange for completing chores or earning good grades is also giving them a small taste of how the real world works, and helps prepare them for their future careers. They’re also learning the value of a hard day’s work. Here are some more tips on how to teach your child about financial responsibility.
Saving money for the future may seem pointless when you are in your twenties and just starting out. Don’t let your current circumstances negatively impact your future success. Make a budget and stick to it! Your future self will thank you!