4 Tips to Keep Your Focus on Saving

It’s no secret that people seeking loans—including mortgages, auto loans and personal loans—enjoyed the affordability of lower interest rates during the last decade or so. But when it comes to saving, those same rates have made it harder for savers to accrue substantial dividends and increase their savings.

However, today’s rates provide excellent opportunities for savers to earn more. Here are four tips to keep you focused on saving:

1. Evaluate your savings goals
   The first step to maximizing your savings is to know why you are doing it. Once you’ve nailed down your “why,” and set specific goals, it’s time to review the details of your savings account—like the dividend rate and accessibility to your money. This information will help you decide which type of account will best help you achieve those goals.
   
   If you’re a little confused about choosing the right type of account, take the time to reach out to your financial institution for some clarity.

2. Savings accounts for growth
   Consider opening a money market or certificate account. These options earn higher yields than traditional savings accounts while still being insured by the NCUA, guaranteeing the safety of your deposit.*
   
   A money market is a high-yield savings accounts that offers a balance between safety and funds accessibility. They work well for those looking to build an emergency fund, which should cover three to six months of living expenses. These accounts:
   
   

   • Allow the accountholder to make transactions (deposits and withdrawals).
   
   
   • Are popular for individuals seeking both safety and higher yields.
   
   
   • Allow your money to grow faster depending on the deposit amount.
   
   
   • Are excellent for shorter-term goals (less than six months).
   
   
   Certificate accounts are fixed-term accounts for those with a specific deposit timeframe in mind. Standard certificates offer the following benefits and conditions:
   
   
   • Get account terms ranging from six months to five years.
   
   
   • Earn higher yields than traditional savings and money market accounts.
   
   
   • Requires a commitment to leave the funds in the account until the term ends to avoid a penalty.

3. Funds accessibility
   It can be tempting to put as much money as possible into certificate accounts with higher yields. However, it’s important to assess your overall financial needs. If you think you may need access to your money before the certificate’s maturity date, a money market account is a safer choice. You won’t earn as much in dividends, but you will also avoid the early-withdrawal penalty.

4. Certificate laddering
   There are several strategies to consider when trying to maximize your savings with certificates. One way to mitigate the risk of inaccessibility is by building a certificate ladder. This technique involves staggering the maturity dates of certificates.
   
   By spreading out the investment across multiple certificates with varying maturity periods, you can ensure consistent access to funds at regular intervals. This approach minimizes the likelihood of having all your funds tied up in long-term investments.
   
   

   

For example, instead of placing your savings in one 36-month certificate, you would allocate your funds into certificates that mature in six months, 12 months, 24 months and 36 months. This creates a ladder where a portion of your investment becomes accessible at each maturity milestone. Once a certificate reaches its maturity date, you can use the money or, if you don’t need it at that moment, reinvest it in a new 36-month option to keep the ladder going.

This effectively reduces the risk of locking up funds for an extended period, while also reaping the benefits of longer-term investments. Certificate laddering not only enhances financial security by ensuring a steady stream of available funds, it also allows you to adapt to changing economic conditions and seize opportunities that may arise.

How much should I save?

If you don’t know where to start, try budgeting 10–20% of your net income for your savings goals. Review your budget to decide how much you can save and which type of account works best for you.

Mountain America Credit Union offers advice to help you prioritize your financial goals and make an informed savings decision. Make an appointment with our financial professionals today!