Build your savings

Ways To Start Building Your Savings

With 40% of Americans saving less this year than last, building your savings can seem like an almost impossible task when there are bills to pay and your income doesn’t increase at the same, or a greater rate, as your expenses. But as part of a routine, finding ways to save money helps you to really think through your routine spending habits and can offer an opportunity to learn new habits that might provide better long-term financial outcomes.

 

There are countless ways to save, but these few suggestions offer a good place to start:

 

  • Create a place or places to put your savings — If you don’t have a savings account, you should open one. Some people open more than one savings account to help them set different savings goals (i.e.; vacation, holidays, education, etc.). Even a piggy bank can suffice if you don’t want to open a savings account. The idea is to have a repository for your saved dollars and a tangible savings location that allows you to see the results of your efforts ongoing and whenever you’d like.

 

  • Set goals — Not everyone is goal oriented, but when you’re trying to save money, it can help to have a goal in mind. Rule of thumb is to at least make sure that you have savings that can cover your expenses for six months to be prepared for emergencies. Goals could also be related to something you need to buy later or just an amount you hope to save every month or every year. If it helps you adopt more of a savings mentality, set a goal.

 

  • Pay yourself first — This might sound trite, but it’s true. 76% of us are living paycheck to paycheck, but perhaps the best way to start is to decide on an amount that you can afford to deposit into your savings account each payday, for example — Even if that is $5. The smallest amounts will add up over time. If your employer offers direct deposit, you can have part of your check deposited directly to your savings account, making it easier to put money away before you have a chance to spend it. An amount as low as $20 every two weeks will add up to more than $500 in a year.

 

  • Review all of your discretionary expenses — Ask yourself if you still want or need what you’re spending on every month. In other words, are you using what you’re buying? For example, are you really using your gym membership or would you more likely take a walk, jog or an occasional class? Do you continue to read the magazines to which you subscribe? Are you really watching cable or could you get away with a much less expensive Netflix or Hulu subscription? Consider the 50/20/30 budget rule when deciding on your wants versus needs — 50% essentials; 20% financial priorities, like retirement; and 30% discretionary.

 

  • Count the cost of your calories — American workers spend about $3,000 per year on coffee and lunch out during the week. If you’re in the habit of stopping for a coffee in the morning or going out for lunch, try making coffee at home or “brown-bagging” your lunch or just a couple of days a week. Even cutting a portion of that amount of annual spending could help build your savings quickly.

 

  • Part with unused possessions — Web sites like eBay and Craigslist offer consumers a platform for capitalizing on all their unused odds and ends. Many of your surplus possessions might have a great deal of value to someone else, even if they have no value to you. So unless you have a sentimental attachment to them, you can often sell your personal items online and put the money in the bank.

 

  • Hold on to the extras — Whether it’s a raise, a rebate, change from cash you spent, a tax return or a cash gift, find ways to take at least part of what you receive and apply it to your savings. While your inclination may be to spend it on an impulse purchase, putting aside even 10% of windfalls like these can have a big impact on your savings account over time.

 

There are countless other ways to save your dollars and once you begin to act on one or two savings ideas that sound simple and reasonable for you and your lifestyle, building your savings will likely become a very rewarding habit.

 

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