A raise can grow your savings

When your salary goes up, it's a great opportunity to grow your savings.

Congrats on the raise! Don't forget to celebrate by giving your savings account a bump, too. Learn more money saving tips from one Texas native as she walks through her "month in money" with State Farm® Agent Lakitsia Gaines, and explores new ways to save.

Life is unexpected. Sometimes you get the raise, and sometimes your income is stalled. Changes in your source of income are inevitable, but it's up to you to adapt your saving habits along the way. Whether it's an increase or a temporary decrease, your saving habits should calibrate with the change. The time in life in which you earn your first big chunk of money varies for everyone. No matter when it happens, it's exciting and worth celebrating. But, once you've finished the cake, start making a plan to save. Resist the urge to spend money just because you have it.

Do you have extra income?

Should you find yourself with an extra bit of cash, be sure to celebrate, then have a plan. If you decide what you want to do with a source of extra income, you can make the most of it when that time comes. For more tips on creating a future spending plan, check out Make the Most of Extra Income.

Where to put your money

To plan to be financially stable for the short-term, it's important to get organized. There are a handful of ways and places to save, and learning to set aside money in multiple places will put you in good shape for the future. A few of the most popular and recommended types of savings include:

Savings account

A classic choice. A general savings account is important to have to save for short- and long-term goals, as well as irregular, but necessary, expenses like car maintenance. Creating automatic payments on payday is an easy and mindless way to build this type of savings account. Also, look for a savings account with minimal or no fees so your money has more opportunity to grow!

Retirement account

Your retirement account can come in multiple forms. There are 401k accounts, which are sponsored by your employer, or you can open an individual retirement account (IRA). An IRA lets your earnings grow tax-deferred until you make withdrawals. There are key differences between Traditional and Roth IRAs, so you'll want to research and choose the right option for your situation. To start comparing today, review retirement plan options from companies like State Farm.

Emergency fund

Emergencies happen, whether it's automotive, dental, kid-related or another surprise expense. All the things you absolutely have to pay for, but aren't able to plan for, fall under this category. If you don't have the cash saved up, you might have to use a credit card, which can create unwanted debt. Help take control of the unexpected by working toward building an emergency fund! For many people, that number works out to somewhere between three and six months of income, but you can use an emergency fund calculator to determine your own individual need. Remember, you won't touch the money in this savings account except for emergencies regarding car repair, home repair, medical bills or loss of income. It will give you comfort knowing there's financial stability during a time of need.

As you curate your savings plan, remember, it's all about balance. Find out what works for you and your time in life.

Next tip: Packing a lunch can pack on the savings. Going out to eat adds up, especially when it's a daily habit. Try packing a lunch to watch your savings grow.

Video Transcript

The information in this article was obtained from various sources not associated with State Farm® (including State Farm Mutual Automobile Insurance Company and its subsidiaries and affiliates). While we believe it to be reliable and accurate, we do not warrant the accuracy or reliability of the information. State Farm is not responsible for, and does not endorse or approve, either implicitly or explicitly, the content of any third party sites that might be hyperlinked from this page. The information is not intended to replace manuals, instructions or information provided by a manufacturer or the advice of a qualified professional, or to affect coverage under any applicable insurance policy. These suggestions are not a complete list of every loss control measure. State Farm makes no guarantees of results from use of this information.
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