The Importance of Saving Money

Key points:

Saving money regularly helps you build wealth and prepare for unexpected expenses.
Clearly defined financial goals make it easier to stay focused on saving.
Emergency savings helps you when unexpected costs occur.

Why saving money is important

Saving helps you build financial security, achieve your personal goals, and prepare for unexpected costs.

Achieve financial freedom
A well-funded savings account can give you the financial freedom to make decisions that may impact you financially. Savings can allow you to shift careers, move locations, or travel. Every dollar saved is one more step toward living life on your terms.
Reach your financial goals
Whether it’s a new car, your dream house, or paying down debt, committing to saving will help you reach your goal. Consider what your goals are and start saving for them.
Money for emergencies
Most of us will have to deal with an unexpected expense at some point. It could be an emergency car repair, household appliance replacement, or an urgent medical expense. You can't predict what will come your way, but you can prepare by having money in savings.

There are different types of savings account to help reach your goals.

Traditional savings accounts
Traditional savings accounts provide easy access to your money whenever you need it. These accounts generally offer lower interest rates and are ideal for everyday savings needs or short-term financial goals.
High-interest savings accounts
High-interest savings accounts typically pay higher interest rates compared to traditional savings accounts. They can be a great choice for growing or saving large amounts of money.
Certificates of Deposit
A certificate of deposit (CD) is a savings account that holds a fixed amount of money for a fixed period of time, such as six months, one year, or five years. In exchange, the issuing bank or credit union pays interest. When you cash in or redeem your CD, you receive the money you originally invested plus any interest.

Tips and strategies to help you build your savings:

Set up a budget
A budget can help increase your savings. Look at your finances and find ways you can add money to your savings.
Set up automatic transfers
Set up automatic transfers to have money added to your savings account automatically on payday. Talk to your bank or credit union on how to get started.
Set realistic savings goals
Whether it's a new car or a down payment for a house, determine how much you would like to save and a goal date. Then find ways to save for that goal.
Regularly review your savings plan
Regularly review your savings plan and adjust as your financial situation changes. If you receive a bonus, financial gift, or pay raise consider adding some of the money to your savings.

Explore these additional resources to learn more about saving.

Creating and Sticking with a Budget
Tips and resources to help you create a budget.

Importance of Having an Emergency Account
Why you should have an emergency savings account.

Saving for Retirement Tips and Resources
Tips and resources to help you save for retirement.

Savings Goal Calculator
Calculator to help you reach your savings goals.

Starting Small Can Lead To Big Savings
Article on how even small amounts can help you reach big goals.