Saving and Investing
Three Steps to Success
Whether you’d like to save money for unexpected expenses, for financial security, or to make your dreams real, you can do it! Illinois Extension is here to help you with practical information on how to start and build your savings.
Begin with an emergency savings account.
Saving and investing money takes extra effort, while spending money often feels easy. If you don’t have an emergency savings account, then this is a good place to start. First, open up a savings account with low fees. Separating your spending dollars from your savings will help you build your savings.
Next, make savings a habit.
Whether you save $1 or $100 a week, try to make it a regular action. If possible, make saving automatic. For example, many people deposit money directly into a savings account from each paycheck. Or, you may find it helpful to save “extra” money such as gifts, bonuses, overtime, etc.
Take time to clarify your goals.
Understanding the purpose of why you’re saving money will help you to stay motivated. Use My Financial Goals List worksheet to get started. If you need resources to help you to decrease your spending and find money to save, explore Illinois Extension’s resources on spending.
Grow Your Savings
What's your goal?
When we plan to use dollars is important as we consider different saving and investing strategies. For example, groceries for this week are a very short-term goal. A new car purchase in the next one to five years is also a short-term goal. Goals that are 10, 15, 20 or even 30 years away are long-term goals.
When saving for long-term goals it’s useful to understand two financial concepts: compounded returns and inflation risk.
Compounded returns happen when you reinvest returns from saving or investing. These compounding returns add up over time and especially make a difference for long-term goals. Saving Strategies for Long-Term Goals provide examples of how compounding returns can help you and why you need to protect your long-term savings from inflation.
Illinois Extension has a series of recorded webinars about saving and investing for long-term goals. The webinars focus on explaining investment jargon as well as describing the rewards and risks of investing.
The more household members and partners can communicate about mutual savings goals, the easier it is likely to be to achieve the goals! Listen in to these Family Financial Feuds podcasts as Illinois Educators discuss challenges around saving and investing money.
