Your Beginner Friendly Guide to Saving 💲
How much do you have saved in your bank account? What a personal question right!? I know talking money can sometimes be uncomfortable, but in order to get that bag, we’re gonna have to become financially smart queens and kings!
I was fortunate to have a mom knowledgable in financial literacy passed down from her mom. Generational financial literacy, what a blessing! It all can start or continue with YOU! Many of us weren't taught even the basics of personal finance in school. So how would we know the difference of a high yield savings account v. a regular savings account? Better yet how do you start saving? How much should you have saved? With so many financial advisors, planners, coach, etc on social media platforms it's hard to decipher where you should start. Especially since most of us are just starting our adult life!
I’m going to go over the importance of saving and some low/mid effort tips and tricks I hope to get you on a great track to saving or increase what you have saved!
Why is saving So Important?
In my personal opinion, I think it’s important to save for three reasons; to have money in case of an emergency, be able to do and buy what I like without worrying I won’t be able to afford it, and retirement at an early age. Now acording to Investopedia.com (a good source, always check your sources), “ it gives you peace of mind, it gives you options, and the more you save, the easier it is to accumulate additional savings.” That peace of mind that financial security gives when an 'oh no' happens is another level. The option to spend your money how you want to after you’ve paid your bills A-Z! Booking multiple vacations because it won’t break the bank✈️ or an early retirement! Lastly, enough money to venture into making your money make you money💸. Basic and advanced financial literacy should be taught in all schools, extremely unsettling it’s not. But it’s ok! We’re gonna learn together!
How much should I have saved by my age?
According to Forbes, the federal reserve doesn’t have specific financial stats for people in their 20s, but rather lumps Americans under 35 together. Weird, but we’re gonna roll with it. The most recent federal reserve data collection from 2019 shows the average American savings for under 35 is $11,250 and median savings $3,240. What does that really mean though? They took a set of data (savings account) from individuals under 35, got a total amount, then divided it by the number of accounts they used, getting the average account balance to be $11,250. With the same data they found the account in the middle (median) to have a balance of $3,240. Of course, these numbers could be drastically different now due to Covid or other economically drastic things that has happened since 2019. Everyone saves at a different rate and peace so don’t let these numbers freak you out. If you’re still in college, recently graduated, starting off at an entry-level job with low salary, etc you’re just beginning your life so it’s not unusual for your savings account to be in it's early development stage. Although you may have some time before you really need to start saving, it’s never too early to start saving!
How should I start saving?
This may sound weird, but I absolutely love a good old fashion budget. I learned the 50-30-20 rule in high school by my mom, and boy did I appreciate that once I got into college! 50% of your check goes towards bills/needs, 30% of your check goes towards personal/wants, and 20% of your check goes towards your savings. Example from budget calculator: Your check this week is $650 after tax, $325 goes towards your bills, $195 for anything you want, and save $130. Since I didn’t have real bills to pay in highschool, I would switch up the formula to 70-30. 70% of my check goes in my 5/3 High Yield Savings Account (HYS) and put the 30% in my checking account at a Credit Union.
Which bank should I be using and which accounts?
There's so many good bank options out there the list is kinda long. I can say when picking a bank what you should look for according to investopedia "the three most important factors in choosing a bank for checking and savings accounts: the type of bank, the rates and fees it charges, and the extra features it offers." Although all these factors are important look into, I just went with whatever my parents trusted, which I'm sure is true for most of you too. Knowing they trust it is good enough right? Double check what type of bank and accounts you have to make sure you're satisfied. You alwayssss want at least 1 High Yield Savings account!!! HYS accounts pay more than the national average on interest rates than a standard or traditional savings account. Think of it as High Interests Account, getting interest back on money you're saving. Interest rates have been pretty low since Covid, but has recently jumped! This is a perfect time to understand interest and take advantage of some of those great rates out there!(thanks mom for this recommendation) Make your money make you money!!💸
Easy saving tips & tricks
HYS- Like I said before it's your money making money. That little interest of .13 every week makes a difference when you use the same bank for years! Check out your local credit union, they tend to offer higher rates. Be careful with using a savings account for bills as some accounts have a transaction fee as a penaltity for not using the account to save.
Easy easy mind trick for saving- I split my check in two different banks because they both offer great benefits that I like and to trick my brain into thinking I have less money than I actually have. So I under spend every (almost) week and use that money to put in a different savings account at the end of the week.
Round up- When you use a debit card linked to your checking account at the bank, the cost of a purchase will be rounded up to the nearest dollar. The extra money then gets deposited into your linked savings account. A few banks offer this, but there are apps dedicated to this. The app I love is Acorn! You get $5 for signing up, it's also an investment app, so you can invest some of the money that's saved right in the app, and common shopping places will invest money if you use the app & are a buying customer! In a year I was able to save over $300 dollars on the app & used it for extra shopping money in Vegas! I've been a proud user $3/month personal plan since 2021! Check out my history below! #referafriend
Closing Message
As always, thank you so much for reading to the end, liking/commenting, or sharing. I am so blessed that my mother instilled the basics of saving at a young age & teaching me to find passion in wanting others to have the same knowledge! I hope in this post you gained a little more knowledge on saving and helped you get on track to increase your savings. If you have any savings recommendations or questions please let me know below! Until the next post!
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