If you’ve made significant withdrawals from your savings to make ends meet over the past few months, you may feel like you’ll never get back on track with your savings goals. The good news is that even if you’ve had to place those goals on hold, you don’t have to see them completely derail. Let’s look at some ways to keep a savings mindset, even during a pandemic.
Don’t Stop Saving Completely.
If possible, continue to put some savings away—even if it’s significantly less than what you were previously setting aside. Seeing savings grow, whether in a savings account, an individual retirement account (IRA) or a 401(k) plan, can provide a sense of control, accomplishment, and security when times are tough.
If you have a 401(k) or other employer-sponsored plan, think twice before lowering your contribution rate: 1) these plans are tax-deferred savings vehicles, and 2) If your employer is matching a percentage of your contributions, they are essentially paying you free money. If you must lower your contribution rate, try not to lower it to less than your employer is matching, so as not to leave that money on the table.
Make the Most of Your Savings.
If you’re able to keep some money in a savings account, now is a good time to make sure you’re getting the most bang for your buck. Compare rates on the savings products your financial institution offers. Be sure to also review account minimum balance requirements, as you don’t want to put your money in an account where you won’t be able to maintain the minimum balance needed to avoid a monthly fee. If your financial institution is offering a better rate, and you’re clear on the terms of the account, take advantage of it.
Don’t Lose Sight of Your Goals.
Whether you’ve been putting money aside for your first home, a new car, or vacation, don’t let your goals be derailed. Some may need to be postponed, but it’s important to keep long-term goals in mind and remember that the situation we’re all in now isn’t permanent. Set a new date for that home purchase, new car, or vacation, and post it where you can see it regularly.
Some people find it easier to save when they designate a savings account for each of their goals (for example, one for emergency savings and one for the down payment on a home).
Give Yourself Credit for the Savings You Have.
If you’ve had to make withdrawals from your savings to pay bills recently, congratulate yourself for the fact that you have that savings. Some don’t. You built up savings once, and you can do it again because you clearly understand the importance of it.
One way to maintain the practice of regularly saving is to keep track of the money you’ve saved. Whether it be from the special offers and refunds out there, or from financial adjustments you’ve made, taking stock of what you’ve saved can help motivate you to keep up the effort:
- Did you get a partial refund on your car insurance?
- Have your gym membership dues been paused until your gym reopens?
- Have you been saving money on gas, dry cleaning and lunches because you or others in the family have been working or learning at home?
- Has your child’s baseball league (or yours) canceled the season?
- Did you cut out some non-necessities from your budget?
- What about that money you saved by not taking the family on vacation for spring break?
- Did you get a refund from your son’s or daughter’s college because it had to close last semester?
- Have you been cooking your own meals and maybe even growing your own food?
To ensure those savings hit your accounts, remember to pay yourself first, and set up automatic transfers to your savings accounts.
There will always be financial ups and downs in life. However, by maintaining the practice of saving—even just a little—you’ll be taking some control over your life and your finances.
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