“If your ship doesn’t come in, swim out to meet it!”
You’ve likely heard this famous Jonathan Winters quote, encouraging us to be proactive in life. We shouldn’t wait for great things to come our way. We should take charge and make great things happen.
Perhaps we can apply this approach to our finances, too. If our ship is financial stability, then saving for the future is our way of swimming out to meet it.
A good first step is to create short-term savings. These funds are reserved for unexpected situations that may arise — a flat tire or broken appliance. They can also be used to fund vacations or to buy Christmas presents. Short-term savings are funds you reserve within a year. (Planning beyond one year is long-term savings. We’ll explore long-term savings in an upcoming post).
To help us get started, we turned to Dragan Jokic, Branch Manager in Green Ridge, who shared 6 strategies for short-term saving:
Tip #1: Create Automatic Transfers from Paycheck to Savings.
Many banks offer the option of automatically transferring funds from direct deposit paychecks into savings accounts. At Fidelity, this system is called Smart Cents Savings. Dragan encourages new clients to take advantage of this savings method as soon as they open checking and savings accounts. “Whether you earn $500 a week or $5,000 week, put a certain amount automatically aside,” he said. It doesn’t have to be a large amount. You can start with $1 transfers. It will help you to get started, and those dollars will add up over time.
Having trouble deciding how much to save? No worries. Take advantage of the online tools your bank offers to help you better understand your spending habits. When you see how much you spend, and compare it to how much you earn, you’ll be able to figure out how much you can comfortably save.
Fidelity clients can access an online pie chart that breaks down their expenditures in every statement. It can be eye-opening. “You might say, “oh, am I really spending that much money at restaurants?’ You don’t always pay attention to how much you’re spending on a daily basis, but you should look at it because it will help you plan for the next month,” Dragan said.
Tip #2: The Needs vs. Wants Test.
Considering the difference between needs and wants plays a vital role in our ability to save money. The next time you’re shopping (in store or online), take a moment to review what’s in your cart before checkout and ask yourself: do I really need this? If the answer is no, remove it from your cart, and designate the funds you would have spent on that item to your short-term savings account. This is a trick Dragan practices regularly. “You can do this. It’s actually simple. It always goes back to needs versus wants,” he said. “Instead of spending $100, spend $60, and put $40 in your savings.”
Tip #3: The Cash Strategy.
Some people find it easier to save money if they see dollars and cents in front of them. If you need a visual to help you manage funds, then set credit and debit cards aside, and try Dragan’s cash strategy for savings. “Write down what you spend at the register, and track your spending on a daily and weekly basis. If you get to a point where you see that you only have $50 left, you’re not going to run out and go shopping,” he said.
Dragan and his wife use the cash strategy on their weekly date night. For example, if they have a $60 budget for food and drinks, and they only spend $40, the remaining $20 goes right into savings. “It’s amazing how much you can save,” he said.
This method changes the way you think about money, which will ultimately help you to change your spending habits. And when you spend less, you can save more.
Tip #4: Maintain an Even Balance.
Every time you look at your checking account online, take note of the balance. Does it end in an odd or even number? If it’s odd, balance things out by transferring the uneven amount into your savings. For example, if your balance is $102.95, transfer $2.95 to savings. “You don’t need to do this every day, but check your account regularly and do this. You’ll be surprised how these small amounts add up. All of a sudden you have $20 or $30 saved,” Dragan said.
Tip #5: Be a Coin Master.
Dragan learned this savings tip from a Fidelity Bank client. It’s a great strategy for those opting to cash their paychecks instead of using direct deposit. “Some people may ask for a roll of coins, and they set them aside. At the end of the year, they cash in their coins. It’s another way of saving,” Dragan said.
Tip #6: Stir Multiple Money Pots.
Set yourself up for financial success by creating multiple accounts with special designations. Those designations will serve as constant reminders of why you’ve been saving. You’ll need a general checking account for operating expenses, and your banker can help you create savings accounts based on your needs, such as an emergency savings fund, a Christmas Club account, or a vacation fund.
Ready to dive in?
Let’s talk! Fidelity Bank has multiple local branch offices throughout Lackawanna and Luzerne counties, and our full-service Customer Care Center is at your service 7 days a week. Call or visit your local branch office today.
Daniel J. Santaniello, President and CEO, of Fidelity Bank, publishes Financially Fit with Fidelity, your guide to financial well-being, every Thursday. If you’re interested in a financial topic we haven’t yet covered or want to subscribe to our emails, please feel free to drop us a line at blog at fddbank dot com. We would love to hear from you.