6 Things You Must Do If Your Savings Fall Below $10,000
Savings milestones are important and can prove a great motivator for financial goals. Reaching $10,000 is one of them as this sum can provide a financial cushion in case of an emergency. But how can consumers reach that goal and make sure they avoid taking money from their savings account along the way?
GOBankingRates talked to several experts who offered tips on how to achieve this.
Start Small and Break It Into Mini-Milestones
One good place to start is by keeping track of your expenses so you can see where you can cut back.
“Financial progress starts with a single step,” said Terry Turner, financial wellness facilitator and writer for Annuity.org. ” Even if it’s just setting up an automatic transfer of $5 or $10 into a separate savings account, that’s a great start. Over time, this habit will help you build up a solid safety net.”
Saving money can be tough, but it’s totally doable, so start by setting achievable goals – maybe try saving an extra $500 every few months, Turner added.
“Take a good look at your budget and figure out where you can cut back on unnecessary expenses. And if you’re feeling up to it, check out some investment options that match your comfort level. Just remember, it’s all about staying consistent and being patient,” he said.
If you’re looking to save up $10,000, it’s all about having a plan and sticking to it, and if you get any unexpected money, such as a tax refund or bonus, consider using that to boost your savings.
“Just keep your eyes on the prize and adjust your plan as needed,” said Turner.
Find Hidden Costs
To grow your savings to $10,000, you need to make consistent contributions to your savings account, but if you don’t have any extra money to set aside, start by looking at hidden fees.
“Comb through your bank and credit card statements to find fees, penalties, and subscriptions you may be paying for without knowing it,” said Leslie Tayne, founder and head attorney at Tayne Law Group. “Some paid services can do this for you as well. Then, eliminate as many as you can. For example, if your checking account charges a monthly maintenance fee, switch to one that doesn’t. Or if you’re still paying for a streaming service you never watch, cancel the account.”
Automating Your Savings
To ensure that you’re consistently building your savings, you can automate a portion of your paycheck to go directly into a savings account each month.
“This strategy makes it easier to stay disciplined with saving–if the money is automatically deposited into a dedicated savings account, then you won’t be tempted to spend it on something else,” said Josh Richner, marketing director at National Legal Center.
Another option, he added, is to consider tried and true personal finance apps to help automate your savings goals.
Refinance High-Interest Debt
If you carry a credit card balance or another high-interest loan, you can potentially save a significant amount of money in monthly interest charges by consolidating your debt with a lower-interest personal loan, said Tayne.
“Alternatively, you could transfer a credit card balance to a new card offering a promotional 0% APR,” Tayne added.
Get a Side Hustle
One way to increase your income and give you room for savings is taking on a side gig.
“With the right skills or expertise, you can easily make extra money through freelance work, side gigs, virtual assistant work, and more,” said Richner.
And as Tayne noted, after all, it’s often easier to make more rather than cut spending.
“This side work can be temporary until you reach your savings goal,” said Tayne.
Get a Financial Coach or Mentor
Sometimes the best advice comes from an outside perspective, so reaching out to a financial coach or mentor can help you create and stick to a budget, provide strategies for increasing your savings, and ensure that you’re on track with reaching your financial goals, said Richner.
He noted, however, that you will have to make sure to know what type of coach to reach out to for your goals. For instance, a financial advisor helps you manage investments and wealth, while a financial planner helps you create strategies for meeting your goals, such as retirement planning, he said.
How to avoid the need to dip into savings?
According to Turner, an emergency fund is an excellent way to ensure you don’t accidentally spend your savings on unexpected expenses.
“Just start by putting aside a little bit of your paycheck each month until you’ve saved up at least $500 to $1,000,” he said. “That’s a start, but eventually, you want it to equal three to six months of your expenses. With an emergency fund, if something unexpected comes up, you can use that money instead of dipping into your main savings. It’s like having a safety net for your finances.”
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