Many people don’t have an emergency savings fund at all and others only have a savings cushion to last about six months. This means that there’s plenty of work to do when it comes to saving.
It’s not as difficult as you may think to start saving money. It simply means making some good choices and you can watch your money start working for you.
Here are five simple steps you can take to boost your savings.
- Assess where your money is going
You have to honestly assess where your money is going. It doesn’t help to put some money aside at the beginning of the month and then dip into it before the month is over. Setting up a monthly budget to get your spending under control can make life difficult at first.
However, there are plenty of mobile apps you can use to track your spending and you may be surprised to see where some of it is going when you face the facts. You may be spending far more on takeaway coffee than you realize.
- Eliminate unnecessary spending
Once you analyze your spending and draw up a budget, you can look at your overhead costs and see how to reduce them. It’s much easier to reduce your spending than to increase your income. Simple steps, like taking lunch to work instead of buying it, can be a good start.
Checkout Saver offers you some great money-saving hacks that can save you money when you shop online. Your savings goal does not have to be huge when you first start or it could feel intimidating. Start small and you can increase it over time.
- Automate your savings
It’s much easier to save if you automate your savings. If you wait till the end of the month to try and save what you have left, there’s likely not to be anything left. Automatically schedule a payment to your savings account when you receive your paycheck.
For example, if you get paid by direct deposit to your checking account once a month, set up a $50 transfer to your savings account and you will have saved $600 by the end of the year, not counting the additional interest your savings will earn. If you can, jumpstart your savings account with your year-end bonus or a tax refund.
- Choose the right checking account
Look for checking accounts that offer rewards such as good interest rates, bonuses for signing up and cashback on purchases up to a certain amount a month. Some checking accounts require you to make a certain number of debit card payments a month to earn a high rate.
This doesn’t mean you should start making extra purchases. If you already make the required amount of payments or more, you will be rewarded by simply doing what you are already doing.
- Use a high yield savings account
Most brick-and-mortar banks offer pretty low interest on savings accounts. If you put your money into a high yield savings account, you could earn much more. Online banks and credit unions tend to offer accounts with higher rates because they save costs by conducting business online.
It is easy to open a savings account online and electronically transfer money into it. If possible, choose an account with minimal charges because high bank fees could cancel out any benefits you receive from higher interest rates. Deposit money into a high-rate savings account with low fees and you can grow your money with little to no extra effort on your part.