Step 2: Save Automatically

Once you have your goal and budget hammered out, you’re ready to begin! One of the easiest ways to save money is to set up a regular, recurring direct deposit. This means the funds will automatically be deducted from your paycheck and placed in a separate savings account of your choosing.

Regardless of how much money you can sock away each paycheck, consider placing it in a savings account with a high-interest rate. The higher the Annual Percentage Yield – or APY – the more your savings account will earn. However, not all high-interest savings accounts may be right for you.

For example, consider how quickly you’ll need to access those funds in an emergency. If it seems likely that your unexpected emergencies may require upfront payments, you probably don’t want to put all of your money into a high-interest savings account that has withdrawal limits and penalties, doesn’t allow check writing, or bars access to funds for certain periods of time.

While those accounts can be a fantastic savings tool and really boost your balance, when it comes to emergency savings you will want to maintain access to at least part of your fund so that, when the worst happens, you’ll have the freedom to get the cash you need quickly.

The important thing is to explore your options and figure out what will work best for your situation – and for the “unexpected” scenarios you’re likely to encounter. For example, if you feel unexpected home repairs are a distinct possibility, you can probably rest easy with a Certificate of Deposit (CD) and its withdrawal hold. But if you have family in another state – a child in college or an aging parent – that could require you to purchase a last-minute plane ticket in an emergency, a Money Market account or plain old savings account may be the better option.

Find out more about your savings options. Set up Direct Deposit with Your First Merchants Account.