She Strengthens

Take Control of Your Finances: A Four-Step Plan

Are you struggling to save money and feeling anxious about your financial future? You’re not alone. Many Americans are financially unprepared for the unexpected, with 57% having less than $1,000 in savings and 39% having no savings at all. But there’s hope. By prioritizing your savings and creating a solid financial foundation, you can build a more secure future.

Step 1: Build an Emergency Fund

An emergency fund is essential for covering unexpected expenses, such as job loss or medical emergencies. Aim to save at least three months’ worth of expenses, but six months is a better cushion. Consider your job market, skills, and credentials to determine how long you might need to rely on your emergency fund.

Choosing the Right Account

For your emergency fund, use a high-yield savings or money market account, which provides easy access to your funds and slightly higher returns than a regular savings account. This fund will help you cover recurring living expenses, unplanned medical expenses, and other unexpected costs.

Step 2: Prioritize Retirement Savings

If your employer offers a retirement plan, contribute to it, especially if they offer a matching program. If not, consider an IRA. Investing early allows compound interest to work in your favor, and these accounts offer tax advantages. Contribute at least enough to receive the full employer match, and increase your contributions over time.

Step 3: Save for Short-Term Goals

A short-term savings account helps you cover large, planned expenses, such as a holiday trip or a new work wardrobe. Use a high-yield savings account, and consider creating individual accounts for each goal. This fund is for discretionary spending, so don’t be afraid to treat yourself.

Step 4: Build Long-Term Savings

Long-term savings are for large purchases you expect to make in two to 10 years, such as a down payment on a house or additional education. The type and timing of your intended purchase will dictate how much you need to save and where to put that money. Consider a mix of high-yield savings and investments, depending on your goals.

Beyond the Essentials

Once you’ve established these four essential accounts, you can explore additional options, such as health savings accounts, tax-advantaged college savings plans, and investment opportunities. Remember, your financial priorities are unique, and it’s essential to find a strategy that works for you.

Maximizing Your Savings Potential

To make the most of your savings, find a system for managing your money, such as using apps to track your accounts and spending. Additionally, consider investing in identity theft protection to safeguard your hard-earned dollars. By following these steps and staying committed to your financial goals, you can build a more secure and prosperous future.