How do I start saving?
So, now you have your goal, but how do you actually start saving? The important thing is to start stashing away small amounts on a regular basis. Here are some tips:
- Take your lunch to work a few times a week instead of eating out every day. Did you know that, according to Forbes, Americans spend an average of $11 each time they go out to lunch? If you brought your lunch three days a week instead of eating out, that would rack up $132 a month in savings — $1,584 a year!
- Make coffee at home instead of buying it at a coffee shop. A cup of coffee costs an average of $2.70, according to the U.S. News and World Report. If you're getting a cup of coffee at Starbucks every weekday, for example, that can quickly add up to about $54 a month.
- Allow yourself a set amount of cash each month for dining out, going to the movies, enjoying happy hour … whatever you like. The emphasis here is using CASH to create self-discipline. For example, take $150 out of your checking account at the beginning of each month and put it in an envelope reserved for these fun outings. When that cash is gone, no more until next month.
- Unsubscribe from emails that come from stores where you spend the most money. This will help you avoid the temptation to buy things you don't need. Just click on the “unsubscribe" link at the bottom of the email.
- Set up an automatic deposit from your paycheck into your emergency fund. If you use direct deposit, most employers allow you to split your paycheck into different accounts. For example, you could deposit 95% of your paycheck into your checking account and 5% of your paycheck into your emergency fund.
Where should I keep my emergency fund?
Once you begin following the tips above and start saving, be sure to put that money into your emergency fund each month; don't leave it in your checking account. You should keep your emergency fund in an independent account that helps it grow. Remember, this money isn't for vacations — it's for unexpected expenses. Two popular ways to safeguard your emergency fund are by opening a traditional savings account or a money market account.
- A traditional savings account is an interest-bearing deposit account that provides a modest interest rate. Banks and financial institutions set limits on how many withdrawals you can make from your savings account each month, and they may charge a fee if you don't maintain a specific minimum daily or average daily balance.
- In comparison, a money market account is a type of savings account that generally has a higher interest rate. However, in exchange for the higher interest rate, money market accounts may have a higher minimum balance and stricter withdrawal requirements.
Both savings and money market accounts help you earn interest on your emergency fund, while keeping it separate from your everyday checking account. If you'd like to learn more about how to set up an emergency fund, please visit a Synovus branch near you and talk with one of our bankers.