Finding an approach that gradually pads your savings account is not always something that happens successfully in the first try. However, by implementing multiple ways to grow your savings fund simultaneously, you’re bound to find a strategy that sticks.
GOBankingRates rounded up easy-to-follow, sustainable ways to increase your wealth that will become more habitual than a chore.
1. Create a Budget
This is the first key to increasing your wealth. If you don’t know where your money is going, you can’t find areas where you can cut back and save.
There are several online tools, as well as software programs that teach you how to budget by cataloging your spending. Additionally, many banks offer budgeting and analysis features that help you get a handle on your spending and track your savings goals.
2. Set Up Automatic Savings Contributions
Even if it’s just $25 per month, get in the habit of putting money aside in your savings account. Ultimately the goal is to have enough of an emergency cushion saved in the account to cover at least three months of expenses. Depositing money into a high-yield savings account is a great way to store your rainy day fund, while helping you also earn more for your diligence.
3. Pay Off Expensive Loans
If you have some money in your bank account, but have high interest loans or credit card debt, use some of that money to pay down those loans to decrease interest rate charges. Use a loan calculator to determine how much you could actually save on interest charges in the long run.
4. Refinance Loans
Interest rates today are low; take a look at the loans you have now (e.g. mortgage, auto loan, home equity loan, and even credit cards and student loans) to determine if you qualify for a lower interest rate. Talk to local banks and credit union lenders to find the best interest rates available, and lower your monthly payment and overall loan expenses in the process.
5. Save Your Change
Every time you pay for your morning coffee, save the change that you get back — it’s amazing how quickly those pennies add up. Try saving all your change for a month, and then deposit it into your savings account for incremental savings.
6. Increase Your Tax Allowances
If you’re getting a huge tax refund every year, you’re essentially loaning the government your hard-earned money tax free. Think about it this way: You would not be able to get a tax-free loan, so don’t give one out yourself. Instead, increase your wage allowances with your employer. For example, if you qualify for two allowances, write that down upon joining your employer, don’t put down zero.
The money you retain on each paycheck by claiming the maximum amount of allowances can then be put into your savings account every month, so you reach your emergency fund goal swiftly.
Saving money doesn’t have to be as complicated or stressful as it sounds, but it does require commitment to see results. With these simple tips on how to save money, you’ll see your savings account balance flourish in no time.
Photo credit: J R