More than 55 million Americans have nothing in their savings account, while 40% of Americans struggle to pay for basic needs – making budgeting and saving more vital than ever.
Building your savings helps you stop depending on credit cards or going into debt while working to achieve your financial goals. Saving may seem impossible, but the hardest part about saving money is getting started. With a simple and realistic plan, you can start saving for your short-term and long-term goals.
Keep reading to learn how to embrace saving and work to secure your financial freedom.
How to Open a Savings Account
The best place to put your savings is one that complements your financial goals and comfort levels. Money in a savings account earns interest, which is excellent because then your money is working for you. Before opening a savings account, take your time and research the terms and interests different credit unions and banks offer. If opening more than one savings account will help you organize your finances better, go for it.
Where Should You Save Your Money?
Before you open your savings account, you need to answer the following questions?
• What are your saving goals?
• When will you need the money?
• Interest rates
If you’re saving to build your emergency fund, keep your money in an easy-to-access account that attracts no penalties on withdrawal. If saving for long-term goals, go for accounts with high-interest rates. You can also opt to have multiple saving accounts to meet different goals.
If you feel you will be tempted to transfer your savings into your checking account, consider opening a savings account with another bank. You’re less likely to touch savings if the funds are harder to access. Be cautious about keeping your savings in cash in case of theft or disaster.
Choose How to Apply
You can apply for a savings account by visiting your preferred banking institution in person, by phone, by mailing the application, or online.
Gather Required Documents
To open any bank account, you need to present some documents and personal information. If you’re opening an individual or joint savings account, make sure that you and the other parties have the following documents:
• Social Security number
• Identification (typically a driver’s license or passport)
• Contact information
• Date of birth
• Address (sometimes including proof of residence, like a utility bill)
• Bank account information for your other accounts, if applicable
Choose an Individual or Joint Account
If you want to create personal savings, open an individual account. If you’re opening an account with a third party, like your child or spouse, open a joint account so that they are also able to access the funds.
Submit Your Application
Submit your application to the financial institution of your choice in person or online, and await account activation which can take a day or two.
Fund Your Savings Account
To activate your account, you need to deposit a minimum opening balance – usually between $25 to $100 depending on the type of account. You can typically fund the account by cash or check. Be prepared to fund the account at the time that you are approved.
Set up Online Banking
Nearly all banks and credit unions offer online banking platforms. Sign up for online banking and download and download the bank’s mobile app to manage your account easily.
Making the Most of Your Savings Account
Set Your Specific Savings Goals
Before you start saving your money, set clear and specific goals for your savings. Do you have an emergency account with a few months of savings, or want to buy a new house in a certain neighborhood? Working with set goals derives more satisfaction and strengthens your savings mindset while allowing you to create a realistic savings plan.
Budget for Savings
Once you have a clear savings goal, figure out what it will take to get there and assess if that amount of time and money is realistic based on your personal circumstances. If not, make more adjustments to your plan. Then sit down, note unnecessary expenses you can let go of, and channel the cash into your savings.
Set up an Automatic Deposit
Set up a fixed automatic fund transfer (usually a percentage of your check or a flat dollar amount) from your paycheck through your employer, or your checking account with your bank to your savings account. You are less likely to spend the funds that you intend to save if the money never touches your spending account in the first place. Just make sure you are able to quickly access your savings in case of an emergency.
Track Your Savings Account
Keep track of your progress and account, and consider setting small, incremental goals. Watching your set goals become a reality as your savings continue to grow is exciting, which makes you less likely to spend frivolously. Though temptations may set in, stay committed! Getting started is always the most challenging part. Every step in the right direction is a massive milestone toward achieving your financial freedom.
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