Healthy Savings Habits
Learn to build healthy savings habits through a CEO staff member narrated video and a sample budgeting worksheet
Why Save Money?
Saving money allows you to have financial flexibility down the line in case of an emergency or to pay for your future needs (housing, children, transportation, vacations, etc.). When you have consistent income, it is always important to put some of the money away in a savings account where it can’t be touched (except during emergencies). This video, narrated by Jose Lara Cruz, the Outreach Specialist, overviews seven easy steps to develop healthy savings habits.
Step One: Record Expenses
The first step to successfully saving money is to track your spending habits. That means anything you spend money on from groceries to rent payments. You could organize it by categories to track spending by week or by month. Moreover, it may be helpful to organize your expenses into two categories, variable (expenses that change) and fixed (expenses that don’t change). Once you have an idea about what you spend on everything monthly, you can create a budget.
Step Two: Create a Budget
In order to successfully create a budget, you must know how much is coming in (income) versus how much is going out (expenses). In general, you should try to put away between 10 and 15 percent of your income. Refer to this Budget to access a sample budgeting worksheet.
Step Three: Cutting Spending
You should start by looking at the variable expenses accrued each month. Some strategies to cut back include: eating out less and cooking more, canceling unnecessary subscriptions that renew each month, and attending inexpensive entertainment options (free concerts, street fairs, etc.). In order to save on fixed expenses, think about changing things like your cell phone carrier or health care plan.
Step Four: Short and Long Term Spending Goals
To create healthy savings habits, it is a good idea to start by putting between 1 and 5 percent of your monthly income into a savings account. This is a good first step and if you feel you are able to deposit more into savings, feel free to do so.
Step Five: Choose a Savings Account
To continue creating healthy savings habits, it is important to open a separate savings account that holds ‘untouchable’ funds. Often times, banks will require a minimum deposit in a savings account to open the account. For example, if you open a savings account with Bank of America, you will need an initial deposit of $500 to open the account. If you end up removing funds from the savings account and dip below the required amount, the bank may charge you a fee.
Step Six: Automatic Savings Deposits
Setting up automatic transfers between your checking and savings accounts is one of the easiest ways to begin saving money. You can choose what portion of your paycheck is sent to your savings account. The easiest way to set this up is to create an online account with your bank, either through the banking app or on a computer.
Step Seven: Track Savings
Once you have set up your savings account and automatic savings deposits, you can continually check your savings account to see how much money you have accumulated.