Going into a new year brings a new chapter to your financial story. While you might be setting different goals for your education, health, travel, or career, you should also consider what financial goals you want to reach in 2025. Knowing how to prioritize your goals for the year can be a challenge. You might want to start investing, paying off debt, or building an emergency fund. Whatever you have in mind, one of the most beneficial financial goals you can set for yourself is savings goals.
You can take many different routes to boost your savings, but one of the best ways to try is through term-share certificates, also known as certificate of deposits or CDs. Certificates can be a valuable tool to excel in your financial growth, and it’s important to know how these types of accounts work. We hope our blog gives you the insight to decide how to reach your financial goals for the new year.
How Can a Certificate Help You Reach Your New Year Savings Goals?
Before we dive into savings goals and how you can reach them, you must know what a certificate is and how it works. Certificates are interest-earning savings accounts where you lock in your money for a given time, which can vary depending on your financial institution. During this time, your money earns interest. One of the benefits of having a certificate is that rates are typically higher than other savings accounts, so you have the potential to receive more returns in the long run. Here are some ways that certificates are a good choice for long-term goals.
Accountability
When creating savings goals, you must have a savings account that you can depend on and keep you accountable. Since you can’t access your money for the time the account is set for, this keeps you from being tempted to use your savings on frivolous spending.
Patience
We live in a society that’s obsessed with instant gratification. It takes a lot of discipline and patience to challenge that mindset when handling our finances, especially when we have deadlines we want to reach with our savings goals. A certificate can help you learn to be patient while waiting and could even earn you more money along the way.
Time Management
No matter what financial goals you may have, each one is going to require time. Whether you are for a concert or a new car, each goal requires you to make a purchase within a unique timeframe. Using a savings goal calculator can help you determine how much money you will need to put into your certificate each month to reach the amount you need on time. This tool can help narrow down which certificate is right for your financial journey.
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What Types of Savings Goals Are Ideal for a Certificate?
Overall, the best type of savings goals for certificates are mid-to-long-term. Since certificates require time and have withdrawal restrictions, you shouldn’t use them for expenses that you need regularly, such as gas, groceries, and utilities. Here are some savings goals where using a certificate would be the most beneficial.
1. Buying a Car
If you know your current vehicle isn’t very reliable, it’s time to start thinking ahead about getting an upgrade. Opening a certificate can help you save diligently to get the amount of money you need to pay as much as you can on your new car, which can help decrease your car loan if you need one.
2. Down Payment on a House
Owning a home is a significant financial responsibility, and planning in advance for any costs that might accumulate is crucial. To make your homebuying journey easier, save money now through an interest-bearing account like a certificate so your money can grow while you save. This strategy can help you be more prepared to handle the many expenses of buying a home, such as closing costs and renovations.
3. Saving For a Dream Vacation
Certificates can also be used for any trips or special purchases you have in mind. For example, you might be planning a tenth-anniversary trip for next year. If you open a certificate now, you will have enough time to contribute to your savings goal.
4. Home Renovations & Personal Projects
Is there a bathroom in your house you’ve been wanting to redesign? Do you want professional landscaping done in your yard? These types of projects are things you’ll want to save up for before making your decision. A savings account dedicated to these projects can help you stay on track to reach these goals.
What Are the Benefits of Using a Certificate Verses a Regular Savings Account?
You might wonder, “Why does a certificate have more benefits than other savings accounts for these goals?” Here are some reasons why certificates might be a better option for your goals for the new year.
Earn More Money
While there are multiple ways to save money, certificates are special because they typically have a higher annual percentage yield than other savings accounts.
No Withdrawals
No money removed means no money spent. While you might not like the idea of being unable to access your money whenever you want, this is beneficial in the long run to prevent you from using your money and keep you on track to meet your goals. Other savings accounts, such as high-yield savings accounts, are not penalized for withdrawing money. These accounts are useful for other areas of your financial journey, but for these types of goals, they leave too much room for you to access your funds without accountability.
Fixed Rate
High-yield savings accounts, traditional savings accounts, and other types of savings accounts can have varying APYs depending on how the Federal Reserve changes rates. Since the rate changes, your earnings will also increase or decrease. However, certificates have fixed rates, so the rate will remain consistent the whole time your money is in the account until the term is complete.
How Do You Choose the Right Term Length for a Certificate?
Determining how long the term length you want for your certificate will depend on what savings goal you have in mind. You must know the total amount you’ll need for your goal and how much you can contribute monthly. Before finalizing your money, make sure you have a well-established budget for the new year so you can be aware of how much your spending, saving, or investing. Look out for any specials your financial institution is offering. These could be better deals with higher interest rates, resulting in more money you’ll have saved.
Reach Your New Year Savings Goals with Leaders Credit Union
Are you ready to reach the savings goals you’ve had in mind in the new year? Reach your savings goals with the help of a term share certificate from Leaders Credit Union. If you’re not sure how to begin planning your savings for 2025, use our free Beginner’s Guide to Establishing Savings.
Leaders Credit Union is federally insured by the NCUA.
