With April being Financial Literacy Month, now may be a good time for a personal assessment of savings. A new survey shows that most Americans — almost 70 percent — worry about their personal finances, and 28 percent are concerned that they don’t save enough. Here’s a guide for those who want to do more or who are trying to start stashing away some cash each month.
- Make a budget. If you don’t already have a budget, now is the time to set one up. Start with a list of expenses, making sure to include everything from mortgage and car payments to credit card bills, utilities, food and entertainment. As you go through account statements, notice where you may be spending superfluously, including daily runs to pricey coffee shops or lunch spots. Sketch out a “hit list” of things to cut back.
Make a plan to start shifting any extra funds you’ve identified toward the future. Having a clear vision of what your savings goals are will help you stay on track. Divvy up what you can save into separate categories for each goal. At the end of each month, check what you’ve saved and spent against your budget, and adjust as necessary over the next month.
- Find the right account. There are several types of accounts available to support savings goals. At the top of everyone’s priority list should be one for retirement savings. After that, ensure you have an emergency fund, ideally with enough money to cover three to six months’ worth of living expenses. Other goal-oriented accounts might be for your children’s college costs, a vacation or holiday gift-giving.
Certificates of deposit, or CDs, may offer a better way to save for long-term goals, as they earn a higher yield in exchange for agreeing to not touch the funds for a certain amount of time. Just keep priorities straight—saving for retirement should always trump funding a vacation.
- Seek support. Never be afraid to ask for help. Three out of four Americans admit to needing a bit of extra guidance when it comes to finances. If you’re feeling a little bewildered, ask for a hand from a financial professional at an institution like Raccoon Valley Bank. They’ll be happy to help.
This spring, clean out bad financial habits and bring in new ones that support saving. Let this be the month that you start setting aside money for the future.
Cait Klein, NerdWallet
Raccoon Valley Bank, member FDIC