Savings are usually used to meet short-term financial needs such as putting money aside for an emergency or to make a down payment on a car. Savings help you have money that you are able to get at quickly, with little or no risk. To build up your savings, plan to save some money every month. You might keep track of your spending to see how much you currently save each month and then plan how much you are going to save on a regular basis.
To build up your savings faster, take advantage of compound interest. Interest paid on previously earned interest as well as on the original deposit helps savings to build up. Along with compounding, adding savings each month and leaving accumulated savings untouched helps you to save for the future. If possible, have your employer automatically deduct money from your paycheck and deposit it into a savings account. You won't miss what you don't see if the amount is small.
Also try these other ideas:
• Try putting pocket change into a large envelope or jar. At the end of the month deposit it into a savings account.
• Put refunds, raises, or bonuses into savings.
• Deposit windfalls or unexpected money such as inheritances or gifts into savings.
• After paying off a loan or credit card, continue to put that same amount each month into savings; or put it toward paying off another loan.
• Carry in your wallet or purse only the amount of money you plan to spend; carrying large amounts of cash only encourages spending.
• For gift giving during holidays, birthdays, or celebrations, spend only the amount you can pay in cash rather than buying on credit.
• Try to limit your use of credit cards—they can encourage you to buy things you don't need. Use credit cards only if you pay the bills in full each month.
• If you must borrow, learn everything about the loan, including interest rate, fees, and penalties for late payments or early repayment. Never respond to any offer that makes borrowing sound easy and cheap—it can cost more in the long run.
• Comparison shop for a variety of items and resources; prices can vary widely.
• Take advantage of educational information that is available to you. Cooperative Extension, in conjunction with a number of organizations, provides local educational programs, publications, and online information on financial management. For tools to consider when saving for the future, go to the "Choose to Save" Web site at http://choosetosave.org, an educational Web site that provides a variety of financial calculators online to help consumers make financial comparisons and choices.
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