How to rebuild your savings.

Unexpected events, like medical emergencies or costly home repairs, can easily drain the savings you had earmarked for other important goals. Waiting around for a financial windfall or “extra” money to rebuild your savings can set you back even further. Fortunately, you can quickly get back on track if you commit to an action plan. Here are some steps and tips to get you started.

Step 1: Review your financial situation.

“Be honest about what you have to work with,” explains Kelly Collins, regional retail banking director at Commerce Bank. “It’s important to get real about how much you have available to save from each paycheck.” She adds that it’s perfectly okay to start small.

As you review your budget and compare take-home pay to household expenses, look for cost-saving opportunities. For example, cancel unnecessary expenses, like a rarely used gym membership or subscription, and redirect those monthly payments into your savings account.

Step 2: Re-examine your financial goals.

Collins recommends thinking about what else you want to save for after rebuilding your savings. For example, do you have a long-term goal of buying a home? “The SMART goal-setting framework can help increase the likelihood of achieving each savings target,” she says.

Here are examples of SMART savings goals:

Rebuilding a savings account balance (short-term goal)
• Specific: I want to rebuild my depleted savings account balance.
• Measurable: I will save $2,000 in a designated savings account.
• Achievable: I will save $200 each month to reach this goal.
• Relevant: This goal is important because a financial safety net keeps me on track with my other money goals.
• Time-bound: I aim to achieve this within 10 months.

Saving for a down payment on a home (long-term goal)
• Specific: I want to save for a down payment on a house.
• Measurable: I will save $12,000 for the down payment.
• Achievable: I will save $500 each month to reach this goal.
• Relevant: This goal is important because homeownership is part of my wealth-building plan.
• Time-bound: I aim to achieve this within two years.

Step 3: Identify your saving priorities.

Collins says you’re not alone if you have multiple savings goals, and putting them into different categories can also help you prioritize those dreams. “Knowing what to save for and how much to save can depend a lot on your life stage, as well,” she adds. For example, someone in their early 20s who has started saving for retirement can save less each month than someone in their 40s or 50s who hasn’t started saving yet. Not only do they have time on their side, starting early allows compound interest to do most of the work of building a retirement nest egg.

However, she adds an important caveat. “Regardless of your life stage, having an emergency savings account that you can access to cover unexpected bills should be a top priority.” If you don’t have an emergency fund, now is the time to start one.

How to find money to put toward your savings goals.

From adjusting lifestyle habits to trimming non-essential expenses, try these tips to help boost your savings.

• Consolidate or refinance your mortgage, car or other loans to reduce your monthly expenses.
• After you’ve reduced household expenses look for ways to increase your income, even temporarily, with a part-time job or by selling items you no longer need.
• Put any additional funds like tax refunds, bonuses or cash rebates toward your savings goals.

Simple saving habits.

To make saving as painless as possible, Collins recommends setting up automatic transfers from your checking account to your savings account on the same day you get your paycheck. Or, use Round Up to make a small deposit into your savings every time you make a debit card purchase. Start taking purposeful action today and you could replenish your savings faster than you thought possible.