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Saving Money With a Purpose

06/09/2023 - Effective Saving, Tools for Teens, Budget Better & Save Smarter

How to Start Saving Money With a Purpose

Create a Savings Plan to Meet Your Financial Goals

Saving money can seem hard to do, especially if you don’t have any goals defined. But saving money can be simple when you have a solid savings plan and an idea of your future financial goals. When it comes to creating a plan and listing your goals, it’s good to start with saving for emergencies and retirement along with short-term goals like a vacation and long-term goals like buying a home.

By creating a savings plan that matches your goals, you can prioritize how you save and what you’re saving for. Saving with a specific purpose in mind is motivating and will help you reevaluate your current spending. To help you prioritize spending goals, financial advisors recommend building a financial cushion for emergencies first.

Why Prioritizing an Emergency Savings Account Should Be Your First Goal

Having money set aside for unexpected events—like car repairs, medical bills, a job loss or other emergencies is a smart financial strategy. A good rule of thumb is to have enough money to cover three to six months of living expenses. When creating your emergency savings plan, you’ll want to leverage a standard savings account that allows easy access to your funds. Options from WesBanco include the Companion Savings account and Statement Savings account.

Once you have your account set up, it’s time to build your savings plan. Determine how much you need to save, and when you want to have that amount in your emergency fund. Then, divide to find out how much you need to put away monthly to meet that goal. You’ll need to build your emergency savings plan into your budget to be sure you’re putting that money into savings after you pay essential bills each month.

Setting Short-Term Savings Goals

After you’ve fed your emergency fund, create short-term savings goals for things you’re going to want or need in the next five years, such as:

  • A down payment on a car
  • Home repairs
  • A vacation

You should keep short-term funds in a savings account, a money market account or a certificate of deposit (CD), where they are accessible and returns are guaranteed. Money for short-term savings goals should not be invested in the stock market because it is a higher-risk environment. Investments have higher earning potential but also greater volatility. You may lose funds without the opportunity to earn them back by the time you need them. The money invested will also be harder to access quickly, making it more difficult to withdraw.

Money Saving Tip: If you purchase CDs, which usually have higher returns than savings and money market accounts, you can ladder their maturity dates so that you always have access to some of your savings penalty-free.

How to Set Long-Term Savings Goals

After you have a plan for emergency funds and set your short-term savings goals, it’s important to consider a long-term savings plan. Long-term savings are for larger purchases and investments:

  • Buying a home
  • An expensive trip
  • Retirement

Saving money for retirement can also include investing those funds into a 401(k) or an IRA, where they grow interest over a long period of time.

Money Saving Tip: As you meet your short-term goals, you may want to begin prioritizing long-term savings goals. For instance, if you have saved up for your goal of a down payment on a car, you can then shift those funds to your long-term savings goal of purchasing a home.

Automating Your Savings for a Fool-Proof Strategy

With a busy lifestyle, keeping track of transferring money to your savings account gets tricky. An easy, fast way to stay on budget and meet your goals is to automatically move money into your savings account after you get paid.

There are a few easy ways to automate your savings:

1. If your employer offers a retirement plan, health savings account (HSA) or parking or transportation flexible spending accounts (FSA), you can sign up to have money automatically deducted from your paycheck pre-tax and put into the accounts to save or allocate toward specific expenses.

2. Another way to make saving easy is to set up automatic transfers from your checking to your savings account based on your savings plan after bills are paid. An example of this could be automating $200 per month into savings for emergencies and $100 per month for a new car.

Automating your savings is a zero-hassle way to help you grow your savings faster. You’ll also learn how to pay yourself first, live on less than you make and stick to your budget.

It is a great way to prioritize tomorrow’s needs over today’s wants.

Money Saving Tip: Create a budget sheet to track your money and monitor progress toward your savings goals. Having a budget sheet helps you determine if your savings plan is working for you or if you need to make changes.

Quick Ways to Save Money So You Can Reach Your Goals Faster

Want to save more money for your emergency fund, vacation or retirement? Check out these small money saving tips that help you find opportunities to cut back on discretionary spending:

  • Examine your home utility usage: if your utility bills are high, consider switching providers or speaking with your current provider to get a lower rate.
  • Prioritize subscriptions: Look at your subscription services and consider canceling one or two subscriptions that you don’t use as often. During this time, save the money you would have spent on those subscriptions and rework your budget to see if you can slot one back in later.
  • Find cheaper insurance: If your insurance is too high, contact your provider every few years and see if you can requote and pay less.
  • Ride a bike or take public transit to save gas: If you’re not traveling far, consider switching to public transit, where the cost is significantly lower than parking and the price of gas.

Explore Your Savings Options

Content is for informational purposes only and is not intended to provide legal or financial advice. The views and opinions expressed do not necessarily represent the views and opinions of WesBanco.

While we hope you find this content useful, it is only intended to serve as a starting point. Your next step is to speak with a qualified, licensed professional who can provide advice tailored to your individual circumstances. Nothing in this article, nor in any associated resources, should be construed as financial or legal advice. Furthermore, while we have made good faith efforts to ensure that the information presented was correct as of the date the content was prepared, we are unable to guarantee that it remains accurate today.

Source: Banzai Financial Literacy Curriculum. Neither Banzai nor its sponsoring partners make any warranties or representations as to the accuracy, applicability, completeness or suitability for any particular purpose of the information contained herein. Banzai and its sponsoring partners expressly disclaim any liability arising from the use or misuse of these materials and, by visiting this site, you agree to release Banzai and its sponsoring partners from any such liability. Do not rely upon the information provided in this content when making decisions regarding financial or legal matters without first consulting with a qualified, licensed professional.

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