Use Automatic Savings Tools to Reach Your Financial Goals

February 29, 2012

One of the simplest and most effective tools you can use for almost any saving goal is an automatic savings plan. Automatic savings plans come in several forms. For example, some employers can deducts a certain amount from each paycheck and deposits it into a specific account. Or, with online banking tools from financial institutions, such as Home Federal Bank, customers can schedule a transfer of a certain amount from their checking account into a savings account on a regular basis.

Automatic transfers add a discipline to your saving. Once people use them, they often find they do not even notice the smaller amount they have to spend each month.

Putting automatic savings plans to work:

1) Save for a major purchase or save for your children’s college education by scheduling an automatic transfer from your checking into a savings account each month. When the balance reaches a certain level, say $5000, transfer the funds into a Certificate Deposit to earn higher rates.

2) Combine an automatic savings plan to fund your IRA contribution. The contribution limit for 2011 is $5,000 for both regular and Roth IRAs ($6,000 if you are age 50 or greater). Decide which type of IRA you want to fund, open the IRA account and then have $416.66 ($500 if you qualify for the extra $1000 contribution) automatically transferred each month into the IRA account.*

3) Use an automatic savings plan for estate planning purposes. Older and wealthier individuals often want to transfer funds to their heirs during their lifetimes to reduce their ultimate taxable estate and to provide their heirs with more immediate funds. Up to $13,000 per year (for 2011) can be transferred to an individual without triggering gift taxes. If both a husband and wife want to make gifts, the total can be up to $26,000 per person. If this is something you want to consider, be sure to talk to your tax advisor. Over a relatively short period, one couple can transfer a great deal of money to their children (and grandchildren) to help manage their estate.

Taking actions to regularly save or transfer money can be easily delayed or forgotten. Using a little bit of automation can make the process easier and more effective. Contact us at Home Federal Bank for more information about these and other savings strategies.

*Available through Hometown Investment Services, Inc., a wholly-owned subsidiary of Home Federal Bank. Investment and insurance products are offered through Fintegra Financial Solutions, an independent registered broker dealer, member number FINRA/SIPC, OSJ phone 763-585-0503. Hometown Investment Services and Fintegra are not affiliated. Investment and Insurance Products offered through Fintegra: • Are NOT Bank Deposits • Are NOT FDIC Insured • May Lose Value • Are NOT Insured By Any Government Agency • Carry NO Financial Institution Guarantee

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