Everyone knows they should save money to help pay for their future needs or wants, but not everyone knows the best or easiest ways to save. Here are a few ways to help you meet your goals.
Review how and where you are saving for retirement. Options include workplace retirement plans, Individual Retirement Accounts (IRAs) offered by many banks and investment companies, and the U.S. Treasury Department’s new “myRA” (myRetirement Account), which is a simple, safe, and affordable savings program to help individuals start saving for retirement. The myRA program offers a new type of Roth IRA, guaranteed by a new U.S. Savings Bond that costs nothing to open and carries no risk of losing value.
Because myRA accounts do not have minimum contribution requirements, savers can contribute the amount that best fits their budget. During the first phase of the program, myRA accounts can be funded through automatic payroll deduction. To open an account or learn more about the myRA program, including eligibility requirements, go to www.myra.treasury.gov or call toll-free 1-855-406-6972.
Set savings goals for specific reasons. “Designating accounts that you will regularly contribute to for a particular purpose, such as for a vacation or the next holiday season, will help motivate you to meet your goals by a certain deadline,” said Luke W. Reynolds, Chief of the FDIC’s Outreach and Program Development Section. “Some banks offer ‘club’ accounts that promote regular, small savings for a certain reason, but you can use regular deposits into any savings account to reach your target.”
Certificates of deposit (CDs), which provide a predetermined fixed- or variable-rate interest payment for a set time period (usually three months to five years), also may be an option.
Find more money to save by cutting expenses. A great resource for ideas on how to use your money wisely is MyMoney.gov, the U.S. government’s main Web site about personal finances with information from more than 20 federal agencies, including the FDIC. Start at the “Spend” page at www.mymoney.gov/spend/Pages/spend.aspx.
If you get a large, one-time “windfall,” consider using some or all of it to help build your emergency savings. Start by checking whether you have enough in a federally insured deposit account to cover three to six months of essential living expenses. If you don’t have that much in your “rainy day fund,” consider adding funds from a tax refund, an inheritance, or other new-found money. This account may help pay for major unexpected expenses or tide you over during a disruption in your income.
For more ways to save, including ideas for keeping banking costs down, search for articles in FDIC Consumer News at www.fdic.gov/consumernews and check out the FDIC’s Money Smart financial education program at www.fdic.gov/moneysmart.