April 9, 2024

The sentiment around saving and budgeting has changed significantly. In the past, consumers largely focused on saving every spare dollar to invest and grow over time. This approach has changed in the recent past. Following the pandemic, credit card spending soared with consumer debt reaching record highs, and many Americans spending more and saving less. Much of this can be blamed on the rising costs of everyday goods.

The fundamental change in savings habits doesn’t change the importance of saving and debt reduction. The effect of consumer debt and lack of savings for emergency expenses can have a significant impact on your wellbeing. This year during America Saves Week, we are encouraging Affinity members to review their savings habits. There are five key focuses to help get back on track if you feel like your savings habits need improvement.

Automating Savings

Setting up automatic transfers can be an effective way for anyone to build a savings account. It can also help make saving a hands-off task, eliminating the temptation to spend the amount or save less. Automatic savings can be further optimized by revisiting the amount contributed to the savings account and increasing it when possible. Building savings through regular deposits can allow for additional earned interest by using a money market or high yield savings account.

Saving for the Unexpected

Unfortunately, Americans face emergency expenses too often. Having access to savings can prevent the reliance on credit cards or loans to cover unexpected costs. Having a good understanding of where unexpected costs have come from in the past - like medical events or car repairs - can help plan for and prevent them in the future.

Planning for Major Milestones

Setting goals and planning for big expenses like buying a home or paying for a child’s education, can sometimes look like an unachievable task, but can be made easier when broken down into reasonable and smaller goals. Good savings habits compound for growth. Similarly, bad habits can also compound and mean pushing off purchases or retirement.

Paying Down Debt

Putting extra income towards debts is a form of saving. Since interest can balloon debts, paying high interest debt down can mean savings over the long term. If you are unsure about what to tackle, a non-profit counseling agency like Navicore¹ can help identify what to prioritize.

Start Saving at Any Time

Whether you feel like it’s too late to start or that you have time to do it in the future, starting to build a savings account is important at any time. It can also be impactful to set an example of saving for your children. Since different generations have different relationships with money, helping younger audiences get started can give them the boost needed for long-term success.

Everyone’s relationship with money is different, but it’s always a good idea to revisit your spending and savings practices to make sure they are aligned with the goals that you have. Affinity can help you with your planning and goal setting. Visit Affinity’s website for more information².

This information is for informational purposes only, is intended to provide general guidance, and does not constitute legal, tax, or financial advice. Each person's circumstances are different and may not apply to the specific information provided. You should seek the advice of a financial professional, tax consultant, and/or legal counsel to discuss your specific needs before making any financial or other commitments regarding the matters related to your condition.

¹ Retrieved from: https://affinity.navicoresolutions.org/

² Retrieved from: https://www.affinityfcu.com/financial-wellbeing/financial-support-center?&