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5 Savings Tips for Working Adults

If you’re a working adult, you’re earning. But are you saving? The fact is, savings are important in achieving your goals, such as planning for retirement and your children’s education. It’s all too easy to fall into patterns of spending, but not of saving.

So how can you save if you’re not, or save more if you’re not comfortable with the current amount you’re setting aside? Take a look at these five tips to get started.

1. Outline Your Savings Goals

The first step is outlining your most important savings goals. If you plan for something, you start to take concrete steps to achieve it. Making a plan will also help you stick to it.

Know your budget – the weekly record of what money comes in and what money goes out. Without a budget, you have no way of knowing how much disposable income you have available for savings. Plus, if you need to economize in some areas, a budget gives you a picture of how much you need to trim your spending.

Make sure your savings account is high interest earning. You need to maximize the earnings potential of the money sitting in your account, which compounding interest in a savings account will do. (For instance, if you’re still using a "student" checking account, it’s worth reevaluating if you qualify for an interest-bearing account.)

It is generally best practice to build an emergency fund that is three to six months’ worth of your salary. If your car breaks down, it you have a major home repair, or if you experience any other unforeseen event, you have money saved to help cover those expenses.

2. Move Beyond the Emergency Fund – Prepare for Retirement

Everyone needs to save as much as possible for retirement. Social Security is not likely to support you adequately once you retire.

If you have access to a 401(k) or 403(b) plan through work, save as much as possible in it. Contributions are taken out pretax, which lowers the amount of taxes you pay on the money. Many employers match your contributions. If they do, you leave money on the table if you don’t participate.

Individual retirement accounts (IRAs) are also an excellent retirement fund choice, and also offer tax advantages

3. Save for Your Children's Education

Higher education is increasingly expensive. The earlier you start saving for your children’s college or trade school, the more time you have to contribute and for funds to grow.

One of the best educational savings plans is a 529, which offers tax advantages to you for saving. The money is also tax-free when taken out for a qualified educational expense.

We know it can be tough to save for both retirement and your children’s education – in effect, saving for both your future and theirs at the same time! But if you have to choose, remember there are loans available to students – but there are no loans for retirement.

4. Consider Purchasing a Home

One of the most important savings goals anyone can have is the purchase of a home. Why? Because home ownership offers many financial advantages that make other savings goals possible.

First, owning your home offers potential appreciation of the home down the line. If home prices rise, your asset is worth more. If you’re still a renter, you can’t benefit from home price increases. (In fact, they can work against you.)

Second, home ownership may offer tax advantages, such as deductions of interest and taxes. The less tax you pay, the more you can save.

It’s very important to make sure your home fits your budget and lifestyle, however. If you buy a house whose payments are too much for your salary, it can affect your ability to live comfortably and save.

5. Automate Your Savings Where You Can

It can be tough to save – and setting money aside and saving every month makes it tougher. The more you have to think about it, the easier it is to put off for this month…and maybe the next month and the next.

The best solution is to set up automatic transfers into your accounts. As soon as your paycheck comes in for the month, have a certain amount automatically go into your savings account. (Then you won’t even have to think about it!)

CBC Bank: Your Partner In Saving

Figuring out a savings plan can be complicated. Let us help. CBC Bank offers savings plans for emergency funds, retirement plans, 529 education funds, and more. Stop by any of our locations or give us a call at 229-242-7600 to discuss how we can help.

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