Savings Are Up: Let's Keep It, Name It, Feel It & Grow It!
CUNA economist, Mike Schenk, recently put out a report stating that savings at credit unions across the country have grown significantly over the past few months.
“This gave us our first look into the full effects of COVID-19 crisis for April, May and June, and the most important thing I think that stands out is the incredible increase in savings growth in just three months,” said Schenk. “In March, savings were up 8.1% year over year. That increased to 16.5%, largely because of federal stimulus deposits made on the part of members. It’s incredible growth, and translates into 15% increase in credit union assets.”
The stimulus funds Americans received in the spring, combined with spending less overall— cutting back on dining out, entertainment, driving, and vacations—along with the general concern of our well-being have resulted in people holding onto more cash than normal.
It’s crucial for those who are fortunate enough to grow their savings (emergency or otherwise) during this time to have a solid plan that will keep them on track, now and in the future.
4 Ways To Be More Intentional About Growing Your Savings:
1. KEEP IT
Most experts agree that an emergency fund should amount to about 3 to 6 months’ worth of your expenses. If you’re currently sitting at one month’s worth, your goal should be to get to three and have a plan to get there. If you’re at three months’ worth now, how will you get to six months’—and how will you keep it there? I suggest putting it out of reach. Think of it as an “In Case of Emergency, Break Glass” fund and limit your access to it so you’re not tempted to pull funds when it’s not really necessary. A Share Certificate is a great option for keeping your funds safe and just out of reach until you need them—plus, it’ll grow your money! Unlike a checking or savings account, you’re not able to access your funds as readily, so transferring a little here and there for non-emergencies is less tempting, and this account type offers a better return in the long run.
2. NAME IT
Giving your savings account a name can make it more meaningful to you. For instance, “For When Life Happens” or “Dream Disney Vacation” are more specific and motivational than simply “My Savings Account” or “Emergency Fund.” Have a specific reason why you’re saving to encourage yourself to achieve the savings milestones that will get you to your goal.
3. FEEL IT
Allow yourself to have an emotional reaction to the number on your savings statement and convert those feelings into action. Hitting a savings goal should make you feel more confident, secure, and in control—maybe even motivated to save more than planned, or create newer, bigger goals! If you see your savings amount and feel the opposite—stressed, guilty, or overwhelmed—embrace those feelings in that moment and determine what steps you can take to feel differently a week, month, or year from now. Let it drive you to get healthier financially. Money certainly has the ability to impact our mental, emotional, and even physical health negatively, so feeling good about it is the key to a healthy life and mindset. If you’re feeling negatively about your finances and aren’t sure how to get on the track to feeling better, we’re here to help—you’re not in it alone!
4. GROW IT
Consider ways to grow the money you’re saving. Make sure you’re storing it in a savings account that offers higher dividends or something like a share certificate that grows at an even quicker rate. Additionally, when you’re able, put any “extra” income you receive throughout the year toward your savings goals. If you’re paid bi-weekly and encounter the occasional three-paycheck-month, determine what you’ll do with that extra money. That third paycheck often comes as a surprise to folks, which means we likely aren’t intentional about doing something useful with this “bonus.” The same goes for other extra funds that come your way—like quarterly or annual bonuses, tax returns, or cost-of-living raises. Always consider what’s coming, and how it can help you reach your goals. Billionaire Warren Buffet has a couple of great quotes on financial wellness, but my favorite is, “Do not save what is left after spending, but spend what is left after saving.” This is same as Grandma Brown telling me, “pay yourself first.” Whether it’s putting money toward your retirement account or growing your savings, it’s always best to pull it off the top. If your family received the $1,200 stimulus and put into savings, you could double it in a year’s time by adding $50 of your paycheck to your savings, which amounts to less than $5 per day. Every little bit adds up!
Saving for emergencies or larger financial goals can feel overwhelming, but keeping these tips in mind along your journey can help. Don’t forget to celebrate each step and milestone along the way, no matter how small they may feel at the time—it’s a process, and one worth sticking with!
We’re always here to support you with your savings goals—whether that’s simply identifying what those goals are and why or coming up with specific steps to take to help you get there.