If you truly want to elevate your finances, the basics aren’t going to cut it. You need to take the extra steps to spend smarter, save more, and earn more. Thankfully, getting started is the biggest hurdle. Once you have started elevating your finances, good daily financial habits will become second nature.
Saving money can often feel challenging to fit into your budget. It requires developing good savings habits, monitoring your overall spending and taking advantage of the right tools that allow you to achieve your goals.
If you’re ready to get on the road to reaching your financial goals, here are five savings strategies to get you started.
Automate Saving from Your Paycheck
When you have to make the conscious choice to save money, you’re far more likely not to. Circumvent forgetfulness and reluctance in one move by setting up an automatic transfer from your paycheck to your savings account, so you have to expend more effort not to save than to save.
To elevate your finances even further, challenge yourself every few months to up the amount automatically transferred. You’ll likely find that you can save more than you thought when you adjust to tighter constraints slowly.
Find Small Ways To Save Each Day…
There are many ways you might be able to reduce your spending, for example by shopping second hand, using coupons, or taking public transportation instead of more expensive options. Consider planning your meals for the coming week based on what’s currently on sale and see how much you can save on your groceries. If you can cut down on $10 per day, you’ll save roughly $3,600 in a year.
…and Put That Money To Work
Saving a little each day is a great first step, but don’t let your money just sit there. Maximize your small daily savings by putting it in an account that generates returns. Earning interest in a high-yield savings account or similar savings product will keep your hard-earned daily savings from depreciating with inflation.
Grow Your Savings With CDs
Offering safety and predictability, as well as higher returns than your typical savings account, Certificates of Deposit (CDs) can be an effective tool to accelerate your savings. You can open CD accounts at many banks and credit unions.
With CDs, you deposit a fixed amount of money for a set period of time, and that money will earn a fixed interest rate during that period. When the term ends, you can withdraw your deposit plus interest. You may also choose to roll your balance over into a new CD for a new term. Keep in mind that there is usually a penalty that comes if you need to withdraw your money earlier than the maturity date.
CDs come with various benefits that can appeal to the saver. Here are a few:
Predictability: While interest rates of high-yield savings accounts can fluctuate over time, a CD guarantees the same fixed rate throughout the term. Some savers prefer CDs because they know how much they’ll earn when it’s time to withdraw their funds.
Higher returns: While the annual percentage yield (APY) varies from CD to CD and depending on the length of your term, they typically pay out much higher returns than a typical savings or checking account.
Low-risk investment: CDs are insured by the FDIC when deposited at an FDIC-insured institution, so you don’t have to worry about losing your money. Plus, the fixed interest rate means you’re not at the mercy of the ups and downs of the stock market when trying to grow your money.
Can encourage responsible saving: One factor to keep in mind with CDs is that you’re essentially locking up your money for a certain period. If you need access to it, you’ll likely have to pay a penalty to withdraw it early. However, the optimistic saver might argue that this protects against unnecessary spending.
Check Your Financial Accounts Daily
You can’t truly elevate your finances without knowing them inside and out. You have to be your own expert, so set aside a few minutes each day to look at your checking account and credit cards. When you make it a daily habit, you’ll be sure to catch and fix any fraud quickly. You’ll also gain a better sense of how much you spend daily and be more likely to notice areas where you can cut back.
You may be surprised how much you can elevate your finances with these simple steps.
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