Savings: Your Key to Success

A white couple discuss their finances at their kitchen table. In front of them are cups of coffee, a notepad, a laptop, and various bills.

You have wants. You have needs. And you have two ways of paying for them – pull out the credit card or use the money you have set aside. Which would you prefer?

It’s a safe bet that most people would choose to have a stash of cash from which they could pay for everything from impulse purchases to long-term financial goals. But how do you save when there are bills to pay and the paycheck only goes so far?

Do It Now

Even without a specific goal, saving immediately will make you feel good. Have debt? Put a little aside anyway. Acquiring a savings habit as soon as possible is critical. By setting a little aside each month while aggressively paying down your obligations, you will graduate into being debt free with a happy little nest egg in place. And in the event of an emergency, you won’t have to touch the credit cards and feel like you’re driving in reverse.

Set a Smart Savings Goal

All achievable goals share the same five S.M.A.R.T. factors:

  • Specific – describe your goal to the smallest details
  • Measurable –  how much do you need to save?
  • Actionable – break it down into reasonable action steps
  • Realistic – could you really achieve this goal in the given time?
  • Time-bound – what is the timeframe for the goal?


Put Your Money Somewhere Productive

How much you have, your timeframe, and your tolerance for risk will determine the best home for your money. A few accounts you may consider are:

  • Savings account – A great starter account. Interest and risk are low and the minimum deposit is usually small.
  • Money market account  This savings account pays slightly better interest but may require a higher minimum balance. (Find Hanscom FCU rates here.)
  • Money market fund  A very secure mutual fund account. Invested in high-quality, short-term investments. Higher deposit, interest and risk.
  • Certificates of deposit (CDs) Generally a three-month to seven-year investment commitment, CDs offer higher and fixed interest rates, but with a greater initial deposit and penalty for early withdrawal.

For mid- to long-term goals, you may opt for investment rather than savings vehicles. After you’ve saved enough in one of the above accounts, you can transfer your money to mutual funds, bonds, or individual stocks if you wish.

Impossible? Not at all. With careful planning, savings is the key to successfully managing your money and getting everything you want.


Boost Your Mood By Creating A Solid Savings Plan

Keeping yourself out of debt could benefit more than just your finances. According to a study from the Center for Financial Security at the University of Wisconsin-Madison, a 10% increase in short-term debt, such as overdue bills and credit card debt, was linked to a 24% increase in symptoms of depression.

Here are a few solid tips on how to decrease your short-term debt, which might also improve your mental health:

  • Keep a record of everything you spend for a couple of months. Then look for expenses to trim, like nights out, a too-large cable package or a daily latte. Apply the savings to your debts.
  • Regularly contact your phone, utility and insurance companies to renegotiate your rates. If you’re behind on payments, ask to set up a payment plan.
  • Use our Online Access HD for online bill payment. Choose a date to pay – funds come out of your account the same day. Your bills will be paid on time and in full (or at least the minimum for credit cards). You’ll avoid late charges!

Creating a savings plan is effective, but we all know unexpected circumstances and emergencies can pop up at a moment's notice. Let’s take a look at our options for these types of situations.

What to Know About Emergency Savings Accounts Or ESAs

If your car conks out or your dog needs emergency surgery. How would you pay for it?

A recent survey shows that 61 percent of Americans said they would either run out of emergency savings by the end of 2020 or had already depleted their savings. Only a little over 18 percent said they'd have enough in emergency savings to get through the year.

For those who are employed, there's a way to build that emergency account relatively painlessly.

It's called an emergency savings account, or an ESA. Consumer advocate groups such as AARP are urging employers to offer these accounts to their employees.

ESAs operate similarly to 401(k)s. Money is automatically transferred from an employee’s paycheck into a savings account the employee can tap into when they need emergency funds.

There's a significant difference between 401(k)s and ESAs. Money placed in your ESA account is taxed as income, so it does not serve as a tax break. But because of this, the deposits do not have to remain in the account long-term and can be accessed at any time.

Because this withdrawal takes place before you see your paycheck, similar to your health insurance costs, you never see the money so you can’t spend it without accessing it directly. This can be an excellent way for some people to let their emergency savings grow.

Even a small amount of savings can add up. Put $20 into an ESA each week and you have your $1,000 (plus a bit extra) in your emergency savings a year later.

ESAs provide other benefits. People with emergency savings accounts are 2.5 times more likely to be confident about their long-term financial goals. Knowing they've got a financial cushion beneath them can provide important peace of mind.

What's in it for employers? Automatic deductions to cover financial emergencies can help employees feel less stressed and therefore more productive. Research has shown that more than 40 percent of Americans report that financial stress makes it difficult to concentrate at work. This loss of productivity, coupled with stress-related absenteeism, has been estimated to cost mid-sized employers about $1 million a year.

Of course, ESAs are not the only way to build up an emergency savings account. You can set up direct deposit from your payroll check so that a certain amount of money goes directly to your emergency savings account. You can also set up an automatic transfer of funds from your checking account to your emergency savings account on a regular basis. Hanscom Federal Credit Union's CU Thrive automated savings program is a terrific way to build up emergency savings. It lets you save as little as $5 to as much as $500 a month automatically from your checking account and it even offers an amazing rate.

Saving automatically requires no planning, no extra effort, and, perhaps most crucially, no discipline beyond the original sign-up. Sound intriguing? Be sure to check with your employer to see if they can offer ESAs to employees. If they don't, consider setting up your own automated savings plan, even if you can only start with a small amount.

How You Can Build Yourself A Safety Net With Emergency Savings

As we’ve discussed, a healthy savings account is important for healthy finances, and neglecting to build emergency savings can be a potentially dangerous oversight. A financial cushion can see you through rough patches like a job loss, medical emergency, or car repairs.

What if a couple of crises happen all at once and you don’t have enough cash to float you through? You might be forced to take out a loan, increase your credit card debt, or dip into your retirement fund. Resorting to any of these options could cost you more than if you had kept building up your emergency savings over time.

Tips For How to Build Your Rainy Day Fund

Financial experts suggest having three to six months of living expenses in emergency savings. This includes food, rent, insurance and other necessities. If you’re single and don’t have kids, this can be a few thousand dollars. If you’re a married homeowner with children, you’ll need much more.

Remember to try these three tips to boost your savings over time:

  1. As previously mentioned, keep a record of your spending. Download our free Financial First Aid guide to show you how.
  2. Don’t wait until the end of the month to save. Deposit a set amount from each paycheck to your savings before you spend a penny.
  3. Find a way to make money on the side, such as a part-time job, a couple of shifts at a restaurant, or freelance gigs. 

If you have any other questions about emergency savings accounts or saving in general, visit for more information.


Learn more here about the rates we offer on our Share Certificates., including our Share Certificate Specials.  Drop by a branch or give our Member Engagement team a call at 781-656-4328 to open your Share Certificate today!

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Hanscom Federal Credit Union
Hanscom Federal Credit Union

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