How to Get the Most Out of Your Savings Account

A savings account is an essential tool when it comes to building wealth and helping you reach important financial milestones. From a new car to a future vacation, a savings account can help get you there. Here are a few ways to maximize your account’s potential and make saving easier.

Before you start saving, it’s important to define your savings goals. Start by categorizing them as short or long-term goals. Some short term goals can include:

The act of savings can sometimes be difficult. Due to the Covid-19 pandemic, only 51% of Americans have less than three months’ worth of emergency savings. Setting up an account specifically for emergency funds is a good start if you haven’t already set one up. Having an emergency account to cover basic needs during a tough time can help you from falling behind give you an opportunity to recover faster. 

If buying a home isn’t quite on the shopping radar just yet, you’ll want to start saving for a down payment to help you prepare for when it is. Make sure your money is safe and sound by verifying that your bank or credit union is insured by looking for the FDIC or NCUA. A savings account will allow you to build while giving you access to your money when you need it.

Just like a home, if you’re thinking of buying a car, saving for a down payment will help you be ready for when you’re ready to drive off the lot. 

Whether you’re traveling or preparing for a special day like a wedding or quinceanera, saving today will help you make sure that those memories happen.

Long-term goals like saving for college and retirement can better be served by utilizing specialized savings accounts with perhaps better interest rates and/or tax benefits like a 529 Plan or an Individual Retirement Account or Roth IRA*. Take advantage of a savings account that pays compound interest to help you reach your long-term goals faster. 

While a traditional savings account can be a great option for your money, if you happen to have a larger starting point of savings, a high yield savings account will most likely earn more than a traditional savings account. Explore your options. At Hughes, you can get started on a High Yield Money Market Savings account with as little as $1,000. With high-yield accounts like Money Market Savings accounts, the higher your balance, the better dividend rate you’ll receive. 

In order to see your money grow, you have to actually fund your savings account. You can skip the branch visits and make your savings automatic thanks to online banking. Set up automatic transfers from your checking account to your savings accounts every payday or choose any day that works best for your schedule. But don’t just automate your savings, automate your habits too. If you happen to get a raise or pay down debt, look to put those gains into your savings account a priority. 

As you build your budget and outline your income sources and expenses, remember to get into the habit of paying yourself first. Make saving an expenses category so you’ll set a pattern and pay yourself just as you would with any other cost.