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Budegeting and Savings

Savings made simple

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Why save?

The short answer: Saving helps you prepare for the unexpected. But there are many reasons to put money aside.

 

For an emergency.he ripple effect of community support

For those who’ve lost work or income during COVID-19, this one will come as no surprise: Having savings ready when you need it can be a lifesaver. But think about other emergencies that cost money: unexpected medical costs, home repairs, car repairs or even unexpected travel. These unforeseen events can cost a lot. Having an emergency fund set aside to handle them is crucial.

 

For emotional well-being. 

The more money you have set aside for a rainy day, the less stressful life tends to be. This may seem obvious. If saving were so easy, we’d all be rich. Believe it or not, there are ways to save money, even when you’re on a tight budget. And the more you save, the less anxious you’ll be about the future. According to personal finance writer Melinda Pettijohn, "The truth is that being broke and suffering financially can take a huge toll on your mental well-being. Your mental wellness is directly related to your physical health. By saving money and making efforts toward becoming more financially healthy, you’ll also make huge positive strides regarding your physical and mental health as well."1

 
For your relationship. 

It’s been shown that money troubles can put stress on marriages and partnerships. Conversely, having open conversations about finances and working toward joint goals (like savings goals) can bring couples closer together.2

 
For the future. 

Saving for your retirement, wedding, new home or college might sound very distant and unimportant right now. But the more you put away today, the more you’ll be able to enjoy a comfortable tomorrow. This goes for your children, too. To get them started on the right foot, start saving for college now. Your kids (and your future self) will thank you.3

 
For others. 

Saving money can mean more than saving for your personal goals—saving means more financial freedom. More financial freedom means more opportunities to donate money to your favorite causes. 

 
For fun! 

Maybe you have some big dreams on your bucket list: travel, homeownership, a boat, artwork or leaving something for your loved ones. Maybe you want the kind of financial freedom to be your own boss or change your career path. Saving money can help you reach your goals and make your aspirations real.

It’s important to distinguish between short- and long-term goals and learn how to save for both. Here we’ll help you break down your options into simple, smart steps to help you achieve them.

 

Saving for your unique future.

Each savings plan looks different, depending on your goals and dreams. We know that savings is never one-size-fits-all. So, figuring out how and what to save for should be customized to your hopes, needs and how you envision your future. 

 

Start by writing down your short- and long-term goals. Be specific and detailed. Do the research to find out how much things will cost and how much money you’ll need to get there. Be prepared to do the work and stay committed to your savings plans. The more you figure out now, the clearer your path to achieving your goals will be.4

 

The important thing is that, outside of a few essential items (retirement, college, cars, crises), a lot of our savings plans will look totally different. Just remember that having savings is crucial and shouldn’t be ignored: Make sure to put money aside each month, regardless of what it is you’re saving for.5

 
The importance of a short-term savings plan. anking tools and resources that can help

How should you get started saving for the short-term? There’s really no other way than to just start. In fact, one small step in the right direction now is the first step on your way to long-term financial success. But how do you save? First things first: You’ll need a budget.

 

1. Write down all your sources of monthly income and all your expenses. Include all your fixed expenses, like:

  • Rent/mortgage
  • Utilities
  • Car payments/transportation
  • Insurance (health, car, life)
  • TV/internet
  • Groceries
  • Childcare
  • Etc.

2. Remember to think about month-to-month expenses (gifts, travel, repairs, maintenance) and be sure to include those too. Factor in all of your savings goals related to these expenses—this might take a bit of research on your part.

 

3. Take stock of all your income to see what you have to work with. Include side projects and freelancing.

 

4. If you’re not quite sure how to begin or you’re worried you might be forgetting something, never fear: There are lots of easy-to-use budgeting tools available to help you make sense of your money. Whatever your specific budgeting need, there’s the right app, site or spreadsheet for you. Do the research to find the one that works best for your needs.6

 

5. You may find you have a lot of things to save for and aren’t sure where to start. One smart place to begin: Establish an emergency fund. This is essential to keeping you prepared for any unforeseeable expenses—like medical bills or car repairs. Different financial experts will give you different advice on what amount this fund should be, but a simple place to start is with $1,000. Once you have that saved, you can start tackling other goals.7

 

Remember that even if you’re just starting out with your short-term savings, you’re establishing smart money habits now that will set you up for success later. One step at a time, you’re building your secure financial future.

 

How to save for long-term goals. 

SPreparing for big goals takes work and doesn’t happen overnight. But having a plan will help you gauge your success. And guess what? The best time to start planning for those goals is right now. So, you’re already on the right track.

 

Why start saving for the long-term now?

"You can save less each month to reach your goals, and not put your finances under strain. You can also benefit from compound interest and returns, while riding out short-term market volatility."8

 

Plus:

"The younger you are when you start regularly saving, the more accustomed you will become to saving rather than spending. This can make life a lot easier when you have big purchases to make or if you have an emergency and need access to money quickly."8

 

Simply put, the sooner you start saving, the more money you’ll have—both through the effects of long-term compound interest (essentially interest on interest: your money making money for you) and the extra number of years you’ll be able to save while you’re working.

 

Long-term savings accounts can be used for:

  • Retirement
  • Health savings accounts
  • More comprehensive emergency funds, to make more money via interest and capital gains or to offset self-employment taxes
  • College tuition

 

All of these savings accrue while steadily improving your financial discipline.9

 

Get started. 

There are a multitude of smart reasons to start saving your hard-earned money as soon as possible. And there are lots of ways to get you there. Begin by reaching out to a Flagstar banker today to find the right savings account for you: We can get you on the best path to reaching your unique savings goals.

How to save with Flagstar Bank

Find a Branch or Learn More About Saving with Flagstar

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You may also be interested in:

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1Pettijohn, Melinda. Why Saving Money is Important: 5 Reasons to Start Saving Money Today. thelogicofmoney.com. March 9, 2020.

https://www.thelogicofmoney.com/why-saving-money-is-important/#:~:text=There%20are%20many%20reasons%20why,good%20example%20for%20your%20children

 

2Alford, Catherine. Never Budget Alone: Plan with Your Partner and Save More Together. MoneyUnder30.com. March 21, 2019.

https://www.moneyunder30.com/budgeting-with-your-partner

 

3Buchenau, Zach. The Importance of Saving Money: 15 Reasons to Start Saving. Be the Budget.com.

https://bethebudget.com/the-importance-of-saving-money/#:~:text=First%20and%20foremost%2C%20saving%20money,greater%20sense%20of%20financial%20freedom.

 

4Dragon, Debbie. Why Should You Have Short- and Long-Term Savings Goals? Mybanktracker.com. July 19, 2018.

https://www.mybanktracker.com/news/importance-setting-short-long-term-savings-account-goals/

 

5Ramsey, Dave. 5 Things We Should All Be Saving For. Daveramsey.com.

https://www.daveramsey.com/blog/5-things-we-should-be-saving-for

 

6The 7 Best Budget Apps for 2020. Nerdwallet.com. December 19, 2019.

https://www.nerdwallet.com/blog/finance/budgeting-saving-tools/

 

7Cruze, Rachel. A Quick Guide to Your Emergency Fund. Daveramsey.com.

https://www.daveramsey.com/blog/quick-guide-to-your-emergency-fund/

 

8Lunn, Emma. What Are the Advantages of Saving Long-Term? Telegraph.co.uk. January 2, 2018.

https://www.telegraph.co.uk/money/how-to-start-saving/advantages-of-saving-long-term/#:~:text=One%20of%20the%20major%20benefits,accumulated%20interest%20of%20previous%20periods

 

95 Reasons Why It’s Important to Establish Long-Term Savings. Wahm.com..

https://www.wahm.com/articles/5-reasons-why-its-important-to-establish-long-term-savings.htmls