Author: Chelsea Culp

Did you know that the easiest and most effective way to save is automatically? Saving automatically is at the heart of America Saves Week. And, it’s how millions of employees save through 401(k) and other retirement programs at work. It’s also how millions of Americans save at their bank or credit union.  It’s a great way to build wealth and financial security, and it’s easy to set up!

How to Save Automatically

• Every month, have your bank or credit union transfer a fixed amount (like $25, $50 or $100) from your checking account to a savings or investment account. Talk to your local bank or credit union to set this up. – OR
• Every pay period, have your employer deduct a certain amount from your paycheck and deposit it in a savings account. Ask your HR representative for more details.
• If your employer offers a retirement account, sign up and put in at least the minimum contribution to receive any matches they may offer. Ask your HR representative for more details.

How to Reduce Debt Automatically

• Set up automatic payments towards your debt by providing your checking account information to your loan provider to ensure that the payments are on time and in full.
• Enrolling in automatic payments may even qualify you for a small interest rate reduction with some types of loans and providers, such as some student loans.
• Not sure how much to save each month? Take the America Saves Pledge. The pledge will help you create a monthly savings plan and stay committed to it all year long!

What does “saving the extra” mean to you? Whether it is putting change in a piggy bank or moving everything not in the budget into savings, those three little words can mean big money down the road. This America Saves Week, try one (or all) of these three ways to save the extra:

1. Add a savings line to your budget. Rent, utilities, internet. Every important piece of your financial picture gets a designated spot in your budget each month, so why not your savings? We don’t always consider our savings goals a priority in our short term savings and spending plan, but it ought to be. Prioritize your goals by adding a “savings” line with an affordable amount to your budget; pay yourself with each paycheck.
2. Stow away the windfall. Did you receive notice of a raise for 2018? Maybe you have a bonus coming your way for a job well done. Whatever the bounty may be, allocate any unexpected funds to your savings goals. You won’t miss the percentage raise you receive when you divert it into your savings account. You weren’t expecting that bonus; tuck it away for a rainy day.
3. Split and save your refund. It’s a universal truth: saving at tax time can be a big step toward meeting your savings goals. This tax season, opt to split a portion of your tax refund into your savings account. For many of us, the tax refund is the largest check we will receive all year, which provides the perfect opportunity to start or grow your savings goal.

1. Put your refund into a saving account

   For people claiming some of the unique tax credits that benefit hardworking families around the country such as the Earned Income Tax Credit and the Child Tax Credit, their tax refund may be the largest sum of money they will see the entire year. By opening a savings account, you can deposit a portion or all of your refund and let the amount grow over time. Luckily, you can do this using the IRS Form 8888, which will divide your refund over multiple accounts.

2. Put your refund into a savings bond

   IRS Form 8888 now allows you to easily and seamlessly purchase Series 1 US Savings Bonds as you prepare your tax return! These 30-year bonds are backed by the United States government and they pay you interest yearly. Bonds are a great, low-risk option to grow your savings.

3. Get your taxes prepared for free

   If you make less than $55,000 a year, you can your taxes prepared at no-cost by IRS-certified volunteers in your local community! The Volunteer Income Tax Assistance (VITA) program has served millions of Americans for more than 45 years. If you qualify, you can find your local VITA program using this tool; at these VITA sites, you can find expert information to help demystify the tax code and to prepare your taxes.

These three steps are only a small sample of how you can leverage this annual process! Tax time can be confusing but you can maximize your tax return to build for a more sustainable future. Don’t delay and be sure to start your own saving story today!

By Justin Chu, Program Associate, Taxpayer Opportunity Network