by Curt Queyrouze, President
Most people don't equate saving money with having fun. Long-term savings for retirement, building an emergency fund and other foundational savings efforts are more about building financial security than having a good time. That doesn't mean your savings can't go toward a vacation, flat-screen TV, motorcycle, piece of art or countless other things designed to bring you joy, however. Let's look at how you should approach saving for things you definitely want, but might not need.
Saving for a summer vacation or a new fall wardrobe is important in its own way. You need to occasionally enjoy yourself and buy things or pay for experiences that aren't strictly necessary. At the same time, you can't neglect your crucial savings goals. Make sure you continue putting money toward retirement and have an emergency fund that's substantial enough to address a variety of uncommon but still possible problems. With these responsibilities taken care of, you can rest assured that your additional savings can go toward something exciting without causing problems if an emergency arises or detracting from your long-term retirement plans.
This is very general financial advice, but it's especially relevant when it comes to saving for vacations and other discretionary purchases: Building a personal budget provides vital insight into your current financial position. We have an in-depth guide that can help you work through the specifics. When you have a strong understanding of exactly how much money comes in each month and how much needs to go out to bills, retirement savings, groceries and other needs, you'll have a clear picture of what's left over. From there, it's so much easier to figure out how much you can put aside for something fun from each paycheck.
You'll also want to consider how long it will take to reach a specific savings goal. A two-week trek across Europe can be especially expensive, even if you look for ways to keep costs low. A long weekend at the beach or a cross-country road trip often carries a more reasonable price tag. You'll need to make a choice based on personal preferences. How long can you wait to make a major purchase? Are there things you'd enjoy almost as much that aren't as expensive? Take a little time to deliberate and make an informed decision. If you have a change of heart later on, you can always adjust your goals.
An old-school strategy for saving for a special purchase centers around keeping cash in an envelope and hiding it somewhere secure. This approach certainly has its appeal, but there are better ways to set aside money for your next flat-screen TV or set of camping equipment. A savings account protects your funds up to $250,000 through the Federal Deposit Insurance Corporation and allows you to easily keep track of how much money you have. It also makes sure your money is accessible, but can't be immediately pulled out of an envelope and spent on an impulse buy. If you choose a high-yield savings account, you can enjoy especially competitive interest rates. That means your money will grow as you continue to save.
Certificates of deposit can also help you keep your money safe and grow it until you know you're ready to make your planned purchase. As a time deposit product, you can't access the money inside without penalty until the agreed term finishes, which makes spending the money less tempting. In return, you enjoy strong interest rates that increase your spending power and help you make the big buy when the time comes. To learn more, get in touch with TAB Bank today!
If you want to explore all of your options for saving money with your bank, check out our eBook titled, What are my options for saving and growing money through my bank? Click on the tile below to access this resource.
About the AuthorFollow on Twitter Follow on Linkedin More Content by Curt Queyrouze