By Curtis Loftis
South Carolina State Treasurer
We often like to say, “You can’t teach an old dog new tricks.” But when it comes to building better saving habits, both young and old can easily learn some new “tricks” that will help them take control of their finances.
February 27 through March 3 is America Saves Week, an annual celebration that encourages individuals to become financially confident by examining their saving habits and setting saving goals. It’s the perfect time to start – or restart – a saving journey. Whether your goals are short-term, such as paying for a vacation, or long-term, such as financing retirement, you’ll find it’s never too late or too early to begin saving.
This America Saves Week, try following these simple tips and tricks to get on the path to finding your own financial confidence in 2023.
1. Saving Automatically
While there’s no magic formula to saving, there are ways to make it easier. By setting up automatic savings, you help ensure that you are contributing a dedicated amount of money on a regular basis, making it easier for you to be consistent. To set up automatic savings, direct your bank, credit union or financial institution to automatically transfer money into your savings account. You’ll save without having to lift a finger – almost like magic.
2. Paying Down Debt is Saving
Whether it takes the form of credit cards, student loans or other installment loans, debt is like the annoying fly that won’t leave us alone. But did you know that paying down debt is, in fact, saving? As you pay off your debt, you’re able to free up money and direct those funds towards more exciting parts of your life – a new car, retirement or even an emergency fund. You can try one of these two main strategies to pay off your debt:
• The Snowball Method: Focus on the balance of each loan and make the minimum payment on all your loans except the one with the smallest balance. Try to put as much money as you can towards it and eventually, you’ll pay off the entirety of it. Then, move on to the next smallest balance and repeat the process.
• The Avalanche Method: Focus on the interest rate of each loan and make the minimum payment on all your loans except the one with the highest interest rate. Put as much money as possible toward that loan. This method reduces the overall amount of interest you must pay across all your loans.
3. Prioritize your Major Milestones
Saving for your first home, education or retirement can be overwhelming. But don’t fret – you can make these major milestones more manageable by deciding which goal is most important to you and getting started saving for that goal. Use your milestone goal to guide your savings plans and know that it’s okay for your priorities to change. There’s no one-size-fits-all solution to saving for a major milestone, but prioritizing your goals helps to make them more manageable.
Begin the Journey
A recent study by New York Life reports that American adults who feel confident in their finances list “having savings” as the top contributing factor. Building your own savings to achieve financial confidence is best viewed as a journey with consistent contributions leading you to your goal. That’s why this America Saves Week, I encourage you to commit to taking the most important step of your savings journey: getting started.
About the author: Curtis Loftis is the State Treasurer of South Carolina. He also serves as the administrator of South Carolina’s Future Scholar 529 College Savings Plan.
Visit treasurer.sc.gov or futurescholar.com for more information on ways to save through a 529 plan.