Save More in the New Year with These Tips
Whether your goal is to save $500 or $5,000, methods used for saving can be easily scaled to accomplish any dream. Developing a plan early into the year can be inspiring, but you don’t need to wait for a new year to get started.
Knowing which products earn the highest dividends will help you reach your goal faster. Depending on your needs, a high yield savings account or certificate are excellent choices for the determined saver.
The Psychology Behind Saving
Our savings habits are more than just applied knowledge. Psychology plays a large part in when and how we save or spend. A study done by researchers at the University of Cambridge shows that, typically, many financial habits are already set by age 7. Spending can be addicting, so combating those feel-good chemicals with psychology-based savings habits will go a long way.
Automating your savings removes the repeated decision-making process by automatically transferring a predetermined amount of money into your dedicated savings account. At the beginning of the year, set up automatic transfers into your savings to recur at your preferred intervals – for example, by paycheck or monthly.
Checking balances regularly helps you to stay informed about your balances or goals and can help hold you accountable. A 2016 study performed by the Federal Reserve found that 62% of mobile banking users checked their balance before making a large purchase, and half of them decided not to purchase an item based on their account balance or credit limit.
Set multiple small goals on the way to larger goals to keep yourself inspired. Celebrating minor victories can reduce willpower fatigue and acknowledge the progress you’re making along the way.
High Yield Savings Account
A high yield savings account offers the withdrawal convenience of a savings account with a greater rate of return than a basic account. These accounts typically have a minimum balance requirement to avoid fees and a limit on how many withdrawals you can make per month, but offer more flexibility than other options, such as certificates.
If you have funds sitting untouched in a regular savings account, there is no reason to not upgrade to a high yield account. High yield savings accounts can earn dividends many times over a standard account, potentially several percentage points higher. This could mean a difference of a few dollars earned in interest over a few years versus a few hundred dollars, depending on your balance.
You can make deposits at any time to your high yield savings account, so don’t wait to deposit your tax return, holiday or gift money, or other large or unexpected sum into your account for maximum earning power.
Check out our calculator to see how long it will take until you reach your savings goal.
Credit unions offer certificates, which are equivalent to a certificate of deposit (CD) at a bank. When opening a certificate, you invest your money for a predetermined length of time, and at the end of that term, your funds and earned dividends become available once again.
A long-term certificate provides a stable rate of return in a hands-off manner. You can choose to have the funds automatically roll into a new certificate at the end of your term, reducing financial decision making with automation.
Certificates offer terms from several months to several years. Longer terms typically come with higher rates, so if you’re looking to maximizing your earning potential with certificates, prepare to be in it for the long haul. Fortunately, rates are usually fixed, meaning that your funds will be protected from the ups and downs of the stock market.
For added flexibility, a Bump-Up Certificate gives you the option to adjust your rate once during your term. In a rising rate environment, this change can earn you even more in dividends.
If you don’t need your funds to be easily accessible and are able to wait until maturity to avoid early withdrawal fees, a certificate is a wonderful option for a patient saver.
Made your decision? Open a high yield savings account or certificate today!
Talk to Our Experts and Retirement Professionals
Saving is a lifetime journey. Over the course of our lives, we save for many major milestones, from down payments on a home, to weddings, to a child’s higher education. Perhaps one of the biggest savings challenges of our lives comes in the form of saving for retirement.
You don’t have to navigate the financial world alone. Receive guidance for your saving and investing goals with our Investment & Retirement Center (IRC) experts, who can assist with your individual situation.
Learn more about our IRC and set up a complimentary consultation here.