I’m about to tell you something that you more than likely already know: managing your money should be at the top of your priority list. According to MarketWatch, 62% of Americans have less than $1,000 stashed away in their savings account. While a staggering 20% don’t have any savings account.
Yes, it’s true that money-talk can be daunting, overwhelming and, frankly, confusing. With so many options, where do you begin? Which accounts yield the most? What are the pros and cons to an online bank? Is there a minimum required to open an account?
As a first step, it’s important to determine what you’re saving for in life. For example, are you recently engaged and saving for a wedding? Or are you attempting to put a down payment on a home? Use the tips below to assist with your money-saving strategy.
1. Wedding Bells Are Ringing
According to The Knot, the average cost of a wedding was $35,329 in 2016. Your eyes aren’t playing tricks on you. Between the venue, caterer, photographer and other costs, expenses for your big day can quickly add up. It’s important to first determine how much you can feasibly spend. While you can easily get caught up in the emotion of planning, you should be realistic when deciding on an amount.
Once a budget is agreed upon, establish how much money you’ll need to set aside each month. For example, if you’re planning a 12-month engagement with a $15,000 wedding, you’ll need to save $1,250 per month. Keep in mind that many vendors don’t accept credit cards and require a cash or check deposit instead. Has you rethinking that whole big wedding thing, huh?
2. Welcome Home
Ready to make the move into a home of your own? It’s important to consider a savings plan well in advance. While not necessary, but definitely helpful, a larger down payment will reduce the amount of money you’ll need to borrow from a lender.
Why does it matter? A loftier down payment makes for a lower monthly payment. Which, in return, decreases the amount of interest that’s paid. One tip to jumpstarting your savings plan is to set aside any money you receive from a bonus or tax refund. These are funds you aren’t relying on for your daily or monthly expenses.
In the meantime you may also want to consider ways to reduce your rent cost. Are you able to downsize to a smaller apartment? Do you have any family that would be open to the idea of you moving in for a year?
3. A New Car
There are many things to consider if you’re on the hunt for a new car. Are you opting for new or new to you? What about a sedan versus a coupe? No matter what you decide on, it’s time to start gearing up your savings!
Take a look at finance calculator through Cars.com. Here you can calculate your estimated monthly payments based on the vehicle’s price. It also evaluates the down payment required which in return will help you determine what you can afford.
It’s also important to keep in mind the potential expenses associated with the car you want to buy. For example, some vehicles require synthetic oil which normally costs twice as much as conventional oil.
Where To Begin
When saving for any life event, it’s imperative to find a savings account that will help you earn interest. Do thorough research when choosing the type of account that works for you. If you’re finding it difficult to set money aside, allot a specific amount from your paycheck to be directly deposited into your savings account.
And remember, long-term, as well as short-term, savings plans are beneficial to consider during any point in your life. It’s time to start setting your goals!