Is your goal to save more money this year? Better budgeting can help you accomplish your savings goals. Build a budget that includes savings. Learn strategies to trim your budget to get closer to increasing your savings.
The Coronavirus pandemic has endangered not only the physical health of our country but also compromised the financial health of many Americans. Small businesses have closed, employees have been laid-off, and many families’ childcare costs have risen due to school closures. The events of the COVID-19 pandemic taught us the importance of saving for the unexpected. Unfortunately, more than half of all Americans are unable to cover an unexpected $1,000 expense. Having a healthy savings account helps you and your family navigate the unexpected. Although we are still in the midst of this pandemic, there are ways you can start saving today. At Muncy Bank, we want to help you make a savings plan that will ease your financial stress and prepare you for whatever the future brings. The easiest way to start is by making a budget.

Why Is Budgeting Important?
A budget is simply a plan for your money. By setting a budget, you intentionally plan out your spending and begin to succeed in growing your savings. Without a budget, you may not know how much money you are spending or where it is going. It can be hard to find money to save when you aren’t tracking your income and expenses.
How to Set a Budget
For best results, start making your budget before the month begins. Identify your income for the upcoming month. Be sure to use your net income, the money that actually gets deposited in your account after taxes. A good budget should plan for every dollar you’ll make and spend during the month.
A common budgeting guide is 60/20/20.
- 60 percent of your net income is allocated to your needs: mortgage/rent payments, utility bills, grocery shopping.
- 20 percent of your income goes towards your wants: dining out, entertainment, shopping.
- 20 percent of your income each month goes towards building your savings or paying off debt.
While the 60/20/20 plan is a good place to start, budgeting is not one-size-fits-all. You may need to pay down some large debts by allocating more money to savings/debt and less to your wants. If you want to make a savings budget plan, you’ll want to analyze how you currently spend money, and see if there are areas where you can spend less and start saving more money.

How to Save Money
Budgeting and saving are not the same thing. Budgeting is the tool that will help you save more money, but first you have to set yourself up for success. Take a look at your current expenses. Are you enrolled in automatic payments for streaming services, a gym you don’t use, or apps on your phone? It’s easy to overlook these expenses since they are automatically charged to your credit card or deducted from your checking account.
Next, identify services that you enjoy using but could be overpaying for each month.
- Lower cost cell phone plans have gained popularity over the last few years and often offer the same quality phones and cell service as the nationwide brands.
- Traditional cable tv service is becoming a thing of the past. If you still pay for monthly cable service, decide if you really use all the channels that you pay for. There are many less expensive options for watching tv, including HD antennas and streaming services.
- How much are you spending each month on take-out meals and coffee? A little meal planning could save you big money by helping you cut back on those high-priced items. You don’t have to give up the latte you love. Instead, consider cutting back on the frequency of your purchases and consider them a treat item instead of a necessity.
Once you’ve identified places where you can save money each month, re-write your budget. You can allocate less money to these items and budget that new-found money for savings. Commit to your savings budget by having a portion of your paycheck go straight into a savings account. If your paycheck is directly deposited from your employer, you can specify a certain amount to go into savings each payday. Since that money won’t show up in your checking account, you are less likely to spend it.

How Many Savings Accounts Should I Have?
Once you’ve committed to saving your money, the next important thing is deciding where to save it. There are two factors to consider when choosing a savings vehicle -- interest rate and liquidity. The interest rate on a savings account is stated in APY, which stands for annual percentage yield. The higher the APY, the more money you will earn on your savings. Liquidity refers to how easy it is to access your money. If a savings account is not very liquid, it means you may have to pay fees if you want to access your money earlier than planned. Here’s a rundown of some common savings vehicles.
Basic Savings Account: This account will look a lot like your checking account. Savings accounts require low initial deposits and will earn interest, but it won’t be a high APY. Liquidity is high, and you can access your money when you need it, for whatever reason.
Certificate of Deposit (CD): CDs are a great savings vehicle if you want to lock your money in and earn a slightly higher APY. The trade-off is lack of liquidity. For a certain interest rate, you agree to leave your money in the CD for a set term. If you need to withdraw your money before the end of the term, you will be charged a penalty fee.
Money Market Account: A FDIC insured MMA is a variable rate account. The APY is not guaranteed but is usually better than a traditional savings account. Your money is liquid in a MMA, so you can withdraw your money when you need it. MMA’s typically require a higher initial deposit than a savings account.
IRA, 401K, Retirement Accounts: If you plan on leaving your money in a savings account until retirement, a retirement account offers the best tax advantages for your money. This is not a liquid account, and you will pay penalties for withdrawing your money early. Once you’ve got your emergency fund saved, try a retirement account for long-term savings benefits. Read more about saving for retirement in our Essential Retirement Guide.

Start Building your Savings
Even the smallest step towards saving is beneficial. If you have questions about how to open a savings account, the friendly employees at Muncy Bank are here to help. For more than 127 years, Central Pennsylvania residents have been trusting Muncy Bank to help them meet their financial goals. For the best savings account, explore our savings account options online. Our knowledgeable employees are here to answer your questions and help you get started saving today. Give us a call at 570.546.2211 or call 1.877.243.8919 during normal bank hours to schedule an appointment. With convenient locations in Muncy, Hughesville, Clarkstown, Montoursville, Dewart, Avis, Montgomery, and Linden, Muncy Bank is proud to be your “Hometown Bank” in Lycoming County.
Read about more ways to improve your savings and budgeting strategy in 7 Pledges for a Healthy Financial Life.
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