Did you make a New Year’s resolution to save more money in 2025? The first step to smart savings is to understand your “savings style,” so you can choose a saving strategy and an account to best fit your needs.
If you’ve got your eye on one specific item or experience, you might be a Single Purpose Saver. This type of saver has a definite goal in mind; which could be a summer vacation, a new vehicle, or a top-of-the-line home theater system. Single Purpose Savers should focus on careful budgeting: calculate how much money you need to reach your goal, then assess your current household income and expenses to see what funds you can set aside each month. Check out Harvard FCU’s Club Savings Accounts, which allow for regular contributions throughout the year via payroll deductions.
An Emergency Saver wants to have a nest egg of cash that’s readily accessible, so they don’t have to rely on credit cards if an emergency should occur. Experts recommend maintaining an emergency fund which can cover three to six months of expenses. If you’re saving up in 2025 to build your emergency fund, consider a high-yield savings account. High-yield accounts offer a higher-than-average interest rate, but you can still withdraw money at any time and with no penalties. For example, Harvard FCU offers a Smart Rewards Savings account so members can earn premium interest on their savings.
The Long Term Saver is thinking about the future. Certain retirement savings accounts are eligible for tax benefits, so it’s usually a good idea to open an Individual Retirement Account (IRA). Harvard FCU offers both IRA and Roth IRA options—with a traditional IRA you get tax-deferred contributions and growth, whereas with a Roth IRA you can withdraw money tax-free later on. Once your money is in an IRA, you can decide how you’d like to invest it. A financial professional can offer more advice on what strategy is best for your lifestyle, your financial situation and your retirement timeline.
If you’re looking to save money while also making money in the process, you could be classified as a High Yield Saver. Most High Yield Savers don’t require immediate access to their money, but at the same time don’t want to tie up certain funds in the stock market—for example, the High Yield Saver might be saving for a house purchase in two years’ time. Term Share Certificates (also known as CDs) usually feature the highest rate of return for savings. With Harvard FCU, savers can choose from a variety of terms based on how long funds will be committed. The longer the term, the higher the interest.
Many people who want to get serious about saving are also grappling with debt. To decide how much money to commit to building savings versus paying off debt, look at your interest rates. People with high-interest debt, usually from credit cards or predatory loans, should focus on paying off debt first. On the other hand, if you’re making regular payments on your mortgage or federal student loans and not accruing any late fees or additional interest, there’s nothing wrong with putting extra cash into an emergency savings fund or starting a single-purpose savings account to prepare for upcoming expenses. For more information about whether or not you should use your savings to pay off debt, check out this blog from Harvard FCU.