Saving: Why it Matters
As difficult as it may be, the first step toward savings is learning about the reasons why it’s important and understanding some basic strategies to save.
Saving money helps you in more ways than one. Savings encourages planning for your future and your children’s future. Savings creates a safety net for unexpected expenses.
First, we know emergencies will happen. An unexpected event –such as a job loss or sudden health crisis – may require you to need funds to help sustain you through an interruption in cash flow. Having an emergency fund can provide financial support and reduce your anxiety and stress. An emergency is difficult enough. Trying to figure out how you are going to pay for an unexpected medical expense, car repair or traveling to get to a loved one in a time of need adds stress and anxiety to your situation.
Second, long-term financial planning is always a good idea. Creating a savings plan to achieve your goals is an important part of the process. Setting yourself up for success is about knowing where you want to be as you move through each step of your life—setting goals like education for yourself or your children. Buying a home. Enhancing your quality of life now and as an older adult. These are all good reasons to save now and often.
How to Save
While it is easy to understand the benefits and reasons to save, it is not always easy to save when you need money to cover day-to-day expenses. Using just one of the tools below can help you move in the right direction without taking too much away from what is needed for day-to-day life.
- Tax Time. Many people use their tax refunds as an opportunity to catch up on bills or purchase a big-ticket item they’ve had their eye on for a while. And there’s absolutely nothing wrong with that. But tax time presents another opportunity for saving. Most of us never receive a large sum of money any other time of the year, which means we never have an opportunity to save so much at one time. Why not take advantage of this moment to save? Why not take this moment to invest in your future self? It doesn’t have to be a huge amount—even just a portion will do. At tax time, you can automatically split your refund between your checking and saving accounts.
United Way of Greater Richmond & Petersburg’s Volunteer Income Tax Assistance program works to ensure that tax returns are accurate and everyone receives their full refund. We help people avoid unclaimed tax credits, fees for tax preparation services and refund anticipation loans. Click here to learn more.
- Automatic Savings. Plan for a portion of your refund to be automatically deposited into savings. If you have direct deposit, you can have a specified amount go directly to your savings account.
- Retirement Accounts. It’s never too early to think about life as an older adult and give yourself more opportunities later in life. Deposit a portion of your refund into your retirement.
Again, many people, particularly low-income families, find it hard to look to the future when they have obstacles and issues to deal with in the present. Luckily, resources exist in the community to support low-income families and help them think through how to manage their budgets and create savings plans.
- Child Savings Accounts are savings accounts specifically designed to create opportunities for parents to save for their child’s future specifically their post-secondary education.
- Individual Development Accounts are adult match savings accounts specifically designed to help adults build assets. Programs offer these accounts to qualified individuals as a way to build savings to pursue higher education, start a small business or purchase a home.