For many people, building savings is something they have yet to master. This can be especially true for individuals who have just entered the workforce or have just gotten started in their career. Often times, with an influx of new money, people find themselves spending more. However, getting into good savings habits early can have many benefits for you in the long run.
‘Paying Yourself First’ – A Saving Mindset
As a new employee, you may have limited experience in your spending and saving habits. You’ll likely have student loans, rent and other bills or debts to tackle. This is why establishing a savings baseline is a great way to get into the right mindset. Determine a percentage of your income that you’ll automatically put away each month. A good goal is 10-15%, however any amount you choose is a good start! Set it up as an auto-deposit into a dedicated account – a practice commonly called ‘paying yourself first.’ You likely won’t miss the money, and your future self will thank you!
Growing Your Emergency Fund
Medical emergencies, a down economy, unexpected auto repairs… these are just a handful of financial issues that can come at you out of nowhere. Having savings built up is one of the best ways to protect yourself. Many financial experts suggest saving three to six months of your salary, but naturally you can adjust as you see fit. Having the funds on hand can make sure you’re prepared for unexpected expenses and can also keep you from having to make decisions that will hurt you in the long run, such as having to use a high-interest credit card to cover an unexpected expense.
Learning to Budget
One of the best benefits of saving early is it forces you to budget. Budgets can be a little intimidating, but at the end of the day, the key to financial success is making and keeping to a budget. Knowing what you have coming in and where your money is going is critical to being in control of your finances. There are plenty of tools on how to create and draft your budget, but speaking with an American Federal Banker about your needs and your goals is also a great place to start.
You’ll Thank Yourself…
One thing is certain: setting up good savings habits will set you up for success in the future, and you will thank yourself down the road. Contact your American Federal Banker with any questions you have on savings, opening accounts, auto-deposit options, and other tools that can help you set yourself up for success!