Budget and Save

How to Make the Most Out of Your Savings

Erin Palmer

August 10, 2020

Man and woman looking at house to own

How to Make the Most Out of Your Savings

No matter what stage of life you’re in, building your savings is an important goal. Creating a savings plan is a good place to start. As you consider your savings goals, it is also a good time to think about how to make your savings last longer.

Here are some tips and strategies for making your savings last longer:

Open Separate Savings Accounts for Specific Goals

An easy way to make your savings last longer is by opening specific savings accounts to match different savings needs. If you only have one savings account, it could be more difficult to reach your goals.

Consider this example. You have a few savings-related goals in mind. Some are smaller, like buying new furniture to redecorate your home. Others are larger, like saving for a down payment for a home. If you only have one savings account and an emergency or unexpected expense occurs, this will also impact your other savings goals.

Separate accounts for specific goals can help. An emergency savings account is the first one to begin, as this provides a buffer to protect your other savings accounts if an emergency takes place. Try to aim for an emergency savings fund that can cover your needs for 3-6 months.

Choose the Right Savings Account for Each Goal

Once you have an emergency account, you can open other accounts to support different short- and long-term goals. As you do this, take time to consider things like:

  • How long you plan to keep the funds in the account
  • Whether or not you need easy access to the funds
  • What the dividend rates are for the savings account

If it is a short-term goal, like saving for new items to redecorate, you might want an account that allows you to access your money when you’ll need it. This could be a regular savings account or a money market account. If it is an intermediate or long-term goal, like saving for a down payment for a home, you might consider a share certificate that offers a higher dividend rate for keeping the funds in the account for a longer time.

Plan for Retirement and Make the Most of Your Funds

It is never too early or too late to start saving for retirement. As soon as you are able, get a start on your retirement savings. The sooner you begin, the more time those funds have to grow!

This is a great lesson to teach the young adults in your life as well. Retirement may seem far away for some, but even small contributions from a younger age can make a major difference. If your employer offers a 401(k) program and offers to match retirement contributions, take them up on it. The younger you start, the more you can grow your funds.

When retirement is closer, it’s time to make the most of your funds. Here are some simple tips to consider:

  • Work with a financial advisor to make a retirement plan that works for your needs
  • Take advantage of employee matched retirement contributions when offered
  • Consider cost of inflation when making your retirement plan
  • Minimize unnecessary expenses
  • Think about if it makes sense to downsize your home
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