The Importance of Saving and Setting Financial Goals

Jul, 11 2016

You’ve created a sustainable household budget and trimmed extra expenses. What will you do with your new extra disposable income? The answer is saving. Unless you win the lottery, you are unlikely to reach your financial goals unless you save. Your savings will grow faster if you put your money in a savings account at a bank or credit union. If your employer offers direct deposit, try deducting a set amount from your paycheck each month to be sent straight to a savings account.

Ways to save include:

Regular savings account – many banks and credit unions do not charge fees and the minimum deposit is low, but you earn a relatively low interest rate and you can take money out whenever you want.
Club account – a savings account you join for special reasons, such as holidays or vacations. You agree to deposit a set amount per month.
Certificate of Deposit (CD) – earns a higher interest rate than a regular savings account, but the minimum deposit is higher (typically $1,000 to $5,000), and your money has to be kept in the account for a set period of time. You may have to pay a penalty if you take your money out before the end of the term.
Money Market Account – earns a higher interest rate than a regular savings account, but the minimum deposit is higher (typically $500 to $2,500), and you are limited the amount of times you can take out money each month.
Matched savings account – a special type of savings account. You keep your money in a bank, and the amount of money you put in your account is matched by a set account. This is much higher than the interest rate on a regular savings account. This can include Individual Development Account (IDA) programs and Family Savings Account (FSA) programs.

For example, the First Home Club program through the Federal Home Loan Bank of New York matches borrowers’ savings $4 to $1 up to $7,500. These savings can be used for the down payment or closing cost for first time homebuyers purchasing a home. This program requires homebuyer education through a housing counseling agency.

Increasing your savings is an important way to achieve financial goals such as becoming a homeowner. A housing counselor can help you create an action plan to identify:

your financial goals
obstacles in the way
strategies for achieving your goals
tasks for your way to success!

Use our member search to find a housing counseling agency near you and develop your action plan to achieve your financial goals!