Most people are not very good when it comes to saving money. If faced with an unexpected $400 expense, a staggering 44 percent of adults say they would be unable to pay or would borrow or sell something to do so, according to a recent report by the Federal Reserve. Building a financial safety net, however, is often the first step to financial security. Not only does it protect you from sinking into debt when calamity strikes, it can also help you create habits that improve your overall financial health. A credit union Amarillo TX can help you get started on an emergency fund, along with these tips:
Open a savings account at a credit union.
The first step to building an emergency fund is opening a savings account. Credit unions often provide products and services, including savings accounts, on more favorable terms than banks. Credit union savings accounts usually feature low or no fees, no minimum balance requirements, and higher savings rates. The average bank savings account has a 0.06% annual percentage yield (APY), while a credit union savings account usually earns at a much higher rate. All of this means you can open and maintain an account easily and grow your savings faster with the help of a credit union.
Develop a goal and track your progress weekly.
Develop a savings goal that is specific, achievable, and time-based. A good rule of thumb is to have between three and six months’ of expenses saved in an emergency fund. While it’s important to have a specific target, you also need to create a timeline. This will help you determine exactly how much money you need to set aside every month. Dedicate one day a week to sit down and monitor your progress against your target. Although progress may seem slow in the beginning, weekly check-ins will keep your savings goal in sight and help you stay on course to reach it.
Set up an automatic savings system.
For many people, saving money for an emergency fund is an afterthought. If you find it difficult to contribute regularly into an emergency fund, consider setting up an automatic savings plan. If you have a direct deposit with your employer, you can often arrange to have part of your paycheck directly deposited into your savings account. If this is not an option, you can set up recurring transfers from your checking account to a savings account through your financial institution. Once you set up automatic transfers, you can let your savings grow unattended. It’s a good idea to set up automatic transfers around the same time your earnings arrive. This way, you won’t miss money that you don’t have the opportunity to spend.
To learn more about how a credit union Amarillo TX can help you reach your savings goals, visit your nearest branch of The People’s Federal Credit Union or contact us at 806-359-8571 today.