Fundamentals may help you grow savings over time.
Don't leave money on the table.
Contribute to your company’s retirement plan and other tax-advantaged accounts up to the maximum match.
What you can do now: Use our Take-Home Pay Calculator to see how retirement plan contributions might affect your take-home pay.
Stop giving so much to credit card companies.
Credit can be a powerful tool if it's used wisely. But if it gets out of hand, maintaining high balances on your credit cards could cost you hundreds of dollars in interest each year. Example: The staggering cost of credit card debt. If you buy a $3,000 TV on a credit card with an annual interest rate of 14%, make a $100 payment each month, and don't use the card for additional purchases, it will take over three years to pay off your balance. And you will end up paying more than $700 in interest—almost a quarter of the original purchase amount.
What you can do now: Use our Debt Calculator to see what your debt is really costing you. Try to negotiate a lower interest rate with your credit card companies. Avoid making only the minimum payment on your balance. Pay as much as you can afford each month to avoid high interest rate charges. If you have more than one credit card, pay off the card with the highest interest rate first.
Save money for emergencies.
Build an emergency fund to cover at least three months' worth of living expenses to help avoid borrowing from credit cards or tapping into retirement funds. Having emergency cash on hand also helps you avoid selling long-term investments at inopportune times in the market.
What you can do now: Make a list of your essential expenses to see how much you need to save. There's no need to include nonessential items like cable TV or entertainment, since this emergency fund is meant to cover the bare necessities. Decide where to keep your funds. It's preferable to keep them somewhere relatively liquid.
Maximize savings to tax-advantaged retirement and other accounts.
Maximize your savings by contributing to your employer-sponsored retirement plan to get the full match amount and up to the annual contribution limit, if possible. If you can afford to save more, consider opening and funding an IRA or if you're eligible, contributing to a tax-advantaged Health Savings Account.
What you can do now: Use our comprehensive Retirement Planning Calculator for a detailed analysis of where you are in relation to your savings goals, plus tips and options to keep making progress.
Consider these goals to help prioritize your savings.
The savings fundamentals above are essential for everyone. Once you've tackled those, consider these additional savings goals in any order. Pick and choose your goals according to your personal financial priorities.
Want more information?
Whether you need help planning for retirement, creating a savings plan, or managing your money, visit the Calculators & Resources section for assistance.
Schwab Savings Fundamentals™ are provided by Charles Schwab & Co., Inc.