Scenario: Building a future
Randie is trying to decide how to increase her savings. Given her situation, which choice do you think is best?
Randie’s making money, paying bills, and buying stuff, but sometimes runs short between paychecks. She doesn’t like feeling broke. She wants to get into the habit of saving so that she has money to fall back on if she loses her job or has an emergency. She also wants to save up for big purchases, like a vacation trip. In the long-run she wants something to show for her hard work and to be able to retire some day.
The consequences of your choice
See the consequences of this choice for Randie and hear what your guide has to say.
“I felt like I was doing the right thing, but this just didn’t work out. I need to get real about how much I can save based on how much I’m earning … and my monthly expenses. The thing I have to do no matter what is pay my bills. But that doesn’t mean I can’t save, too. There may be some expenses I can cut back on in order to save more. And if I get a raise or a bonus or a tax refund, I can save that, too.”
Sorry, this may have seemed liked good advice, but it just wasn’t realistic. She’d be better off deciding on an amount to save from every paycheck she earns, taking into account her monthly income and expenses. Randie’s ideas to cut expenses and save extra money are both great.
The consequences of your choice
See the consequences of this choice for Randie and hear what your guide has to say.
“Setting aside this extra money is definitely helping, but my savings still aren’t building up as much or as fast as I want them to. I think it would be easier to have some percentage of every paycheck automatically go into my savings account. If I never see that money, I won’t be tempted to spend it, and my savings will build up a lot faster.”
This was good advice but it’s only part of the solution. One of the best ways to save more is to make it automatic. She can do better if she has a percentage of every paycheck deposited directly into her savings account, or sets up an automatic monthly transfers from her checking account.
The consequences of your choice
See the consequences of this choice for Randie and hear what your guide has to say.
“This is working out great. The money goes right into my savings so I’m never tempted to spend it. And I picked a percentage to save that works for me, so I still have enough money to pay my bills. Now I’m looking at other ways to keep my savings growing – like earning a higher interest rate and saving extra money, like my tax refund.”
Awesome advice! Making savings automatic and saving as much as you can at the best interest rate you can find are all great strategies for building wealth and a strong financial future. As Randie earns more over time, she should increase the amount she saves as much as she can.
To earn more interest on your savings, shop for a savings account with the highest Annual Percentage Yield (APY) you can find.
See Spending Smart to learn more about creating your own spending plan, including deciding how much to save. Click the Next button to continue.