How to Build Your Savings Account

April 22, 2024 by Partner Colorado Credit Union

Building your savings account is a smart financial goal, and there are several effective strategies to help you achieve it. Here are some ways you can build your savings account.

Set Clear Savings Goals

Define why you're saving and how much you need to save. Having specific goals, such as saving for emergencies, a vacation, or a down payment on a house, can provide motivation and direction. It may be helpful to break down your goals into long-term and short-term savings goals. These can include saving for retirement, a dream vacation or covering a large purchase like an RV or your first home. Make sure to assign a dollar value for each goal, and prioritize what’s most important to you.

Create a Budget

Track your income and expenses to understand where your money is going. Set aside a portion of your income specifically for savings. When you’re creating your budget, treat your savings as if it were any other expense. Consider using budgeting apps or tools to help you manage your finances. As a Partner Colorado member, you can use My Financial Partner to create a budget and set specific limits for various spending categories like groceries, gas, entertainment and more.

Automate Your Savings

Set up automatic transfers from your checking account to your savings account on payday. This "pay yourself first" approach ensures saving becomes a priority and reduces the temptation to spend the money elsewhere.

Give Yourself a "Raise"

Whenever you receive a raise, bonus, tax refund, inheritance or other unexpected income, commit to saving a portion of it before spending it on other expenses or indulgences. This allows you to enjoy the increased income while still boosting your savings.

Reduce Unnecessary Expenses

Review your spending habits and identify areas where you can cut back. This might include dining out less frequently, canceling unused subscriptions, or finding more affordable alternatives for everyday purchases, like making your morning coffee at home rather than buying one at a coffee shop.

Track Your Progress

Regularly monitor your savings account balance and celebrate milestones along the way. Seeing your savings grow can be a powerful motivator to continue your efforts.

Earn Extra Income

Explore opportunities to increase your income, such as taking on a part-time job, freelancing, or selling items you no longer need. Use the additional earnings to boost your savings.

Cut Back on Online Shopping

One of the best things about online shopping is the convenience. However, that convenience can lead to overspending if you’re not careful. Many online retailers let you save your payment method and billing information, which almost makes it too easy to buy whatever you want, whenever you want. Consider deleting your saved payment information to make it less convenient each time you shop online. If you have to manually enter your credit card number with each purchase, it may make you less likely to buy things you don’t need.

Maximize Your Interest Earnings

Consider opening a high-yield certificate of deposit (CD) with Partner Colorado to earn a higher rate of interest on your savings. Compare the interest rates and terms offered to find the best option for your financial goals.

Avoid Lifestyle Inflation

As your income grows, resist the urge to increase your spending as well. Instead, continue living below your means and allocate the extra income toward savings and investments.

By implementing these strategies consistently and staying disciplined, you can effectively build your savings account over time. Remember, even small contributions add up, so every step you take toward your savings goals is meaningful.