The Benefits of Saving Early and Often

Planning for the future requires careful consideration. Two pivotal strategies are starting early and increasing the amount you save. While we can't dictate interest rates or foresee stock market movements, we can decide when we begin saving and how much we set aside.

Starting your savings journey early doesn't just mean that you save more — it means that you earn more, too. As you accumulate savings, compound interest amplifies its growth. This means you don't just earn on your initial savings, but also on the interest it generates. Consider the Rule of 72 as an example: Money roughly doubles when the product of the interest rate and the number of years equals 72. So, if you're earning 5% interest, your initial savings will double in 14.5 years. If you earn 6% interest, that time drops to only 12 years!

Make Saving a Habit

Taking part in your employer's 401(k) plan, if available, is one of the simplest ways to cultivate a savings habit. This allows you to contribute a portion of each paycheck directly into this plan. Plus, with any employer match, your contributions grow even further. Another consistent method to save is by setting up automatic transfers with your bank. With automatic transfers, you can determine the amount and frequency of transfers from your checking to savings account. Alternatively, you may consider payroll deductions through your workplace, which has a similar outcome as automatic transfers.

At Woodforest, we offer tools such as our 52 Week Savings Challenge to aid in the financial success of our customers. Check out the challenge and our Start Saving page to learn more about ways to save!

Looking for more advanced savings and investing assistance? Woodforest has that covered for you, too. We’re excited to provide you with options to take your financial goals to the next level through our collaboration with Marstone LLC and our affiliate Woodforest Wealth. Visit our Investments page to learn more and choose the best fit for your needs!

Make Smart Choices When Saving

The growth of your savings isn't just about how much or often you save; it's also about the returns on your investments. While you might not have control over interest rates or market fluctuations, you can explore a variety of savings options for varying returns. For instance, think about investing in Certificates of Deposit (CDs) instead of just keeping money in a regular savings account. CDs are timed investments. They typically offer better interest rates than a regular savings account, but you may face penalties if you withdraw money before the fixed time period is over.

For those comfortable with limited access to their savings, CDs present an appealing option. Another savvy savings strategy is the traditional IRA. You can set one up regardless of your income or eligibility in your company's retirement plan. For the year 2024, the contribution limit is $7,000 for those under age 50, or $8,000 for those 50 or older. One advantage of traditional IRAs is tax-deferred growth, effectively boosting your returns. In other words, the money you contribute to a traditional IRA is pre-tax, which allows for greater potential growth. However, taxes are due upon withdrawal, and early withdrawals before age 59 ½ may incur penalties.

Make Your Money Work For You If you usually have money left over in your checking account after paying bills, consider putting that money to work for you. With our CDs, you have the opportunity to put your extra cash in a high-yield savings account or CD account and watch your money grow faster. Check out our CD rates to learn more! Utilizing a savings account can be a valuable tool in your financial journey, allowing you to set aside funds for particular objectives and maintain your commitment to future aspirations. If you're considering opening a savings account, take the time to select an account that aligns with your individual requirements and financial goals. Learn more about our savings account types here!