How To Advance Your Savings Practices
Savings is just as important as having health insurance, as with health insurance it's not about if, it is about when. When will you decide that savings is a priority for your financial health? It's easy to postpone starting to save for a later day, but a solid plan is key to success. By following some basic guidelines, you're more likely to achieve financial security.
Pay yourself first.
Use automated transfers to get in the habit of saving. Money will be transferred from your account without you seeing it, which makes you less likely to miss it. How do you start an automated transfer? Simply, login to your online banking. Then select transfers, where you will find a scheduled transfers option. You can then set up the amount, frequency and end time.
Save 10% of your paycheck.
The general rule of thumb is to save about 10% of each paycheck. If that seems too high, try 5% and work your way up to saving 10% of your earnings. Add 1% every year you get a raise until you reach 10%.
Know yourself.
Examine your goals to determine which savings plan will work best for you. For example, don't invest all your money in an aggressive stock or mutual fund if you're conservative with your money. If you're saving for retirement, select a plan that will fit your financial needs down the road.
Realize that age matters.
Always take into consideration how much time you have to save for your goal. If you are a recent college graduate, you have several decades to ride out the highs and lows of the market and can take advantage of more high-risk investments. If you're only a few years from retirement, less risky investments are a better option.
See the benefit of compound interest.
The simplest way you can invest your money is to leave it alone and let it "compound" over time. You earn interest not only on what you save, but also on the dividends generated. The earlier and more you save, the more your money will grow.
Use dollar-cost averaging.
This is the process of routinely investing a set amount of money over time, rather than all in one lump sum. It's a convenient savings method, particularly for beginning investors. For example, each month transfer $25 or $50 from your share draft account directly into an investment vehicle such as a traditional or Roth IRA. You reduce your overall risk from market fluctuations because your money buys more shares when the price of a share is down, and your money buys fewer shares when the price of a share is up. Bottom line: You've reduced your investment risk.
Use the Rule of 72.
To figure out how long it will take for your investment to double with compound interest, use this rule: Divide 72 by the interest rate you expect to receive on an investment. For example, if your investment earns 4% interest, your money will double in 18 years (72 divided by 4 is 18).
If you already have a significant savings you should re-evaluate what the interest is in the share account you have. When you open a Share Certificate at Garden Savings you have the option for many different terms so you can create a savings that will make your money work for you! We are currently offering two special promotional Term Share Certificate rates on our 13-month Certificate at 3.56% APY and our 4-year Certificate at 3.82% APY. This is a limited time offer so please check out our rates and contact us soon. We look forward to helping choose one with a high rate of return that’s just right for you!
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Garden Savings Federal Credit Union
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