We hope you received everything you hoped for during the holiday season. If not, it’s time to give yourself a gift that keeps giving: The gift of saving money. On the surface, it may not sound as exciting as what was on your holiday wish list, but it’s a habit that can help you:
- Get the things and experiences you want
- Push back against inflation
- Overcome unexpected financial hits
- Increase peace of mind during retirement
As The Wall Street Journal recently said, now is a bad time to spend money, this is a moment to focus on saving. Try these tips to help you get into the saving money habit, cut expenses, and redirect funds to save for what’s important to you in 2024 and beyond.
A Penny Not Spent Is A Penny Earned
Are you being a mindful spender? Limit spending on things you want, and look for ways to save money on the things you need. Imagine how much you’d save monthly if you cut out just one weekly trip to your favorite coffee spot or dinner or lunch out. If you have multiple streaming services, canceling one can save you more than $100 a year. Visiting your local library for books and movies is a great to cut your entertainment budget to nearly zero. Do you need a new item of clothing? If so, can it be purchased at a thrift store? Gas prices can vary wildly from block to block. You could save more than you think every fill-up by going to a different gas station or paying with cash. How long has it been since you reviewed and compared your insurance needs? You could save hundreds each year by bundling your policies or switching carriers. Are you monitoring your energy usage? With colder temperatures, running the heat may be your first instinct, but wearing a sweater at home and adding an extra blanket when you’re sleeping instead of turning on the heat can help lower expenses. Lowering the temperature of your thermostat can also help you save money.
Track Your Expenses
You probably know how much you pay monthly for your housing, transportation, and favorite streaming service, but do you know how much you pay each month for gas, insurance, groceries, dining out, pet care, entertainment, gifts, and charity donations? You might discover the total is greater than you think. Start tracking all your expenses. Be sure to include cash payments and small things you pay for as part of your daily activities, not just the big monthly bills. This will help you understand your actual monthly expenses. With this knowledge, you can take steps to adjust your spending behavior.
Are you paying for subscriptions you no longer need or want? Chances are, you might be. The beauty of automatic payments is you don’t have to think about ever missing a renewal date for your gym, streaming and music service, or food delivery and dating apps. According to a recent survey, the average monthly spend on subscriptions was $219.* The downside is you may be paying for things you no longer need or want because you forgot about them. Cutting these services and putting that money toward your savings isn’t complicated. In the coming months, we’ll be adding a new Subscription Manager Tool in Tulee, our digital banking app. Subscription Manager empowers you to easily cancel subscriptions that no longer add value to your life. Imagine channeling those funds into a savings account. Not only do you save, you earn interest, building on your savings month after month. Look for more news about Subscription Manager soon.
The 50/30/20 Rule
Now that you understand your expenses better, let’s take the next step: budgeting. The 50/30/20 rule is a simple way to allocate your money. Take a look at your income after taxes. Then, divide this amount into three spending categories:
- 50% on needs: This covers the bills you must pay monthly, including housing, car payments, groceries, insurance, debts, and utilities. These bills aren’t going away, but there are ways to trim these expenses. Consider moving to a more affordable area if you’re renting. Adjust your thermostat to save on heating and cooling bills. Be water-wise. Rate shop for insurance. Use coupons at the market and avoid buying items that lack nutritional value.
- 30% on wants: This covers all the non-essentials. Gyms are great, but you can work out at home. Why pay for streaming services when you could be watching free TV? Are you eating out instead of cooking your meals at home? Perhaps you’re buying clothes beyond what you need. Or continually upgrading technology when your current systems still function well. Taking a fresh look at these items could help you realize you don’t “need” all of your “wants.”
- 20% on savings: Try allocating this amount to savings. Start building an emergency fund to cover all your needs for at least three to six months. Then, focus on retirement and other long-term goals, such as buying a house, making IRA contributions, or making debt repayment beyond the minimum to erase a debt sooner. If saving 20 percent is too great to begin with, start with 10 percent for a few months and increase your savings percentage monthly as you cut out wants and find ways to trim the cost of needs.
What To Do With Your Savings
Congratulations! You better understand your expenses and have begun incorporating the 50/30/20 rule into your life. Next up, make your savings work for you. Start with a high-interest savings account. With our Online Savings, you’ll earn an impressive 4.00% APY** with Direct Deposit (3.50% APY without Direct Deposit). There’s no minimum deposit or maintenance fees, and your funds are federally insured. You can also sign up for automatic recurring transfers to grow your savings without thinking about it. In addition to earning a higher yield with Direct Deposit, you’re making saving automatic.
Take Your Savings To The Next Level
When you’re ready to bump up your savings, consider a Flex-Term Certificate. You can earn up to 5.00% APY†, and you get to choose the term. If you’re uneasy about putting your money in a Certificate, go for a short 3, 6, 9, 12, 18, or 24 month term that’ll earn 5.00% APY. But if you’re concerned interest rates will drop, we’ve got you covered. Lock in a high 4.25% APY for a 36, 48, or 60 month term. Your funds are insured, and you only need $1,000 to open an account. No matter which term you choose, you get an impressive yield on your savings month after month after month.
A Few Final Thoughts
As you start 2024, remember that we’re here to help you give yourself the gift of savings. You can open a Savings or Checking account online, at one of our local branches, or by calling us at 800.877.2345.
We will NEVER call, email, or text you for any personal information, username, passwords, or passcodes. If you receive a call, email, or text from any number or person claiming to be an employee of the Credit Union requesting this information, LET US KNOW BY CALLING US DIRECTLY at 800.877.2345.
*Schulz, Bailey, “Subscription fatigue: More companies are charging monthly fees. How much can consumers take?” USA TODAY, 22 February 2023.
** APY = Annual Percentage Yield. APY is the annualized rate based on a compounding period of one year. When the deposited money earns dividends and the accumulated dividends starts earning dividends as well, we are talking about compounding. Fees could reduce the earnings on an account. All yields except Certificate yields are subject to change retroactively to the beginning of the month.
Rate bonus for $1,000 monthly Direct Deposit into a Farmers Insurance Federal Credit Union Checking Account. No branch or call center access with this account.
†Limited Time Offer Flex-Term Share Certificate available on new Certificates. The following terms are available as follows: 1) 3 months, 6 months, 9 months, 12 months, 18 months, and 24 months. This is a promotional yield of 5.00% APY; Annual Percentage Yield (APY) is calculated on a 4.89% base rate; 2) 36 months, 48 months, and 60 months, this is a promotional yield of 4.25% APY; Annual Percentage Yield (APY) is calculated on a 4.17% base rate. Yields are subject to change without notice. “Flex-Term” Bonus Dividend may not be combined with any other dividend increase/bonus, i.e., “Direct Deposit Bonus” and “Jumbo Certificate” increased rates. $1,000.00 minimum balance, regular Share Certificate requirement on a 365-day basis compounding monthly or at account closure. IRA Share Certificates with a 12-month term or greater qualify for this promotion. No additional deposits accepted (other than dividends) during certificate term. There is a substantial penalty for early withdrawal of Certificate funds. Fees and other conditions may reduce earnings. The Flex-Term promotional Certificate will automatically roll over to the same term as the Flex-Term period selected at the time of opening at the available rates of Certificates at maturity. Federal regulations require dividends to be paid from available earnings; dividends are contingent upon this regulation. Refer to our TISA Disclosure for terms and conditions. APY = Annual Percentage Yield. Yields are subject to change at any time. Early withdrawal penalty and fees could reduce the earnings on an account.