The start of a new year is the perfect opportunity to reassess your financial goals and take control of your savings.
Whether you’re starting from scratch or looking to maximize your current savings strategies, there are plenty of smart practices and tools to help you build a solid financial foundation.
Here are some effective ways to grow your savings in the year ahead.
1. Open a High-Yield Savings Account
High-yield savings accounts (HYSAs) offer significantly higher interest rates than traditional savings accounts, allowing your money to grow faster without any extra effort. They are also one of the most flexible ways to grow your savings, as you retain complete access to your funds.
Benefits:
- Higher interest rates mean more earnings on your savings.
- FDIC insurance protects your deposits up to $250,000.
- Many HYSAs have no monthly fees and low minimum balance requirements.
How to Get Started: Research and compare different HYSAs to find one with a competitive rate that matches your savings goals. Be sure to check if there are any limitations on withdrawals or deposits.
2. Consider Certificates of Deposit (CDs)
Certificates of deposit are time-based savings tools that offer higher interest rates in exchange for locking your money away for a set period, ranging from a few months to several years. CDs are ideal for short- or medium-term goals where you won’t need immediate access to the funds.
Benefits:
- Guaranteed returns due to fixed interest rates.
- Safe and predictable, with FDIC insurance up to $250,000.
How to Get Started: Choose a CD term length that aligns with your savings goals. Consider a CD laddering strategy, where you open multiple CDs with staggered maturity dates to maintain some liquidity while earning higher interest on longer terms.
3. Automate your savings
Automating your savings removes the temptation to spend money meant for your future. Set up recurring transfers from your checking account to your savings account to ensure you’re consistently building your savings.
Benefits:
- Creates a “set-it-and-forget-it” system for saving.
- Helps you prioritize savings over discretionary spending.
How to Get Started: Most banks and financial apps allow you to set up automatic transfers. Determine a realistic amount to transfer regularly, whether weekly, bi-weekly or monthly.
4. Reevaluate your budget
The start of the year is an excellent time to review your budget and identify areas where you can cut back. Small adjustments can free up money for savings without drastically altering your lifestyle.
Tips for success:
- Track your spending to see where your money goes.
- Eliminate unnecessary subscriptions or reduce discretionary expenses.
- Reallocate freed-up funds directly to your savings.
5. Take advantage of employer matching contributions
If your employer offers a 401(k) or similar retirement plan with matching contributions, ensure you’re contributing enough to take full advantage of the match. This is essentially free money added to your retirement savings.
Benefits:
- Increases your savings without additional effort.
- Contributions often have tax advantages.
How to get started: Review your 401(k) plan details and adjust your contributions to meet the matching threshold. If you’re unsure, consult your HR department or a financial advisor.
6. Build an emergency fund
An emergency fund is a financial safety net that can help you avoid debt in case of unexpected expenses like medical bills or car repairs. Aim to save three to six months’ worth of living expenses.
How to get started:
- Use a high-yield savings account to maximize growth.
- Start small by saving a portion of each paycheck.
- Treat your emergency fund as untouchable except for true emergencies.
Set yourself up for success
Taking control of your savings requires a combination of smart financial tools and disciplined habits. By incorporating high-yield savings accounts, CDs, automated transfers, and thoughtful budgeting into your financial plan, you can set yourself up for a successful year and a brighter financial future.
Need help getting started? Set up a savings consultation with a banker at First Fed! Drop by one of the local branches or call ahead to schedule an appointment.
First Fed is a member FDIC and equal housing lender.
