How to Save Money with a Savings Account

How to start saving money

There are 3 key steps to start saving money: Identifying your goals, tracking your spending and creating a budget that lets you achieve those goals.

1. Identify your goals

To figure out how much money to save, think about your financial goals. For example:

• If you want to buy a new car, how much will the down payment be? Do you want to pay your new insurance policy in full for the year?
• If you want to take a vacation, how much do you need for travel and accommodations? Do you want to have room in your travel budget for incidentals, like souvenirs or dinner at a seaside restaurant?
• If you’re buying a home, what home price is at the top of your budget? What down payment percentage do you want to aim for?

Whatever number you come up with, it’s usually a good idea to make your savings goal slightly larger than what you calculate. That way, you can cover unexpected costs.

2. Track your spending

Your spending habits are key to understanding how much you can afford to save. If you’re new to budgeting or you haven’t recently reviewed your spending habits, you may want to look at your expenses over the past month (or longer, for added accuracy). Review your bank and credit card statements to see how much you’ve actually spent. This can help you understand where your money is going and how much you spend each month in total.

3. Create a budget

A budget is a spending plan. Once you know how much you’re generally spending, you can compare that to your earnings to understand how much you can afford to put into savings.

Next, figure out how long it will take to reach your savings goal by dividing that goal by your monthly savings amount.

If you’re happy with that timeline, you can put your plan into action by setting up automatic transfers to your savings account or manually transferring funds each month. If you’d like to reach your goal more quickly, you may want to look at your expenses and see if there’s room to cut out certain items so you can afford to put more money into savings.

Remember: The point of a budget is to help you become aware of your spending habits and live the life you want. You can always adjust your budget as your needs and goals change over time.

How to save money: selecting a savings account

You may consider the following factors:

• Opening deposit requirement: You may need to deposit a minimum amount of money to open certain savings accounts.
• APY: The higher the rate, the more your money can grow over time. Just keep in mind that APYs are typically variable, meaning they can change over time.
• Fees: Some financial institutions may charge fees for certain accounts, which may eat into your earnings. Understanding how fees work, and if there are opportunities to avoid them, can help you assess your options.
• Withdrawal restrictions: Some banks may limit how often you can withdraw funds from your savings account
  

It can take a bit of research to find the right savings account for you. But if you spend the time to consider your options, a savings account can become a key tool to help you achieve your financial goals.

Disclosure: This article is for general educational purposes. It is not intended to provide financial advice. It also is not intended to completely describe any Citi product or service. You should refer to the terms and conditions financial institutions provide for various products.