Saving doesn’t come easy for everyone. Some people are spenders, and if they see money, they have to spend it. Sure, this approach provides instant-gratification. But it also becomes harder to reach financial goals.
Even if you don’t have the best history with money, there are practical and simple ways to create a doable savings plan.
1. Know what you want.
It isn’t enough to simply save. If you don’t have an end goal in mind, chances are that you won’t stick with your savings plan. What do you hope to achieve? Are you looking to save money for a house? Do you want to build an emergency fund? Are you saving money to supplement your retirement income? Regardless of how big or small the goal, attaching a goal to your savings account will keep your mind focused on the big picture, which can help you make sound financial decisions.
2. Make it automatic.
Manually transferring funds into your savings account works, but you should also explore automatic savings options. You can set up transfers with your bank and determine when you want funds taken from your checking account. Additionally, you can inquire about saving options offered by your bank. For example, if you bank with Wells Fargo, you may benefit from the bank’s Way2Save program.
For every debit card transaction, the bank will transfer $1 from your checking account into your saving account. In most cases, you won’t even miss the money, and by the end of the year, you can effortless grow your savings by a few extra hundred dollars.
3. Change your mindset.
You can’t create a successful savings plan without making a few sacrifices. Maybe you’re used to buying and doing anything you want. This makes for a fun life, but this mindset doesn’t benefit your bank account.
Some people complain that they can’t build their savings because of lack of disposable income. But perhaps the problem isn’t lack of funds, but rather the inability to deny oneself. Prioritizing your spending and cutting back in certain areas makes a difference. There are several ways to boost your savings accounts, and paying yourself first is one of the fastest ways to reach your savings goals.
This approach takes discipline, but it can work. Ideally, you want to set aside at least 10% of your monthly income. This might seem like a stretch, especially if you’re already pinching pennies. But if you track where your money goes for a few weeks, you can learn a lot about your spending habits. Eating out less, spending less on entertainment and curbing other expenses can free up cash, giving you the opportunity to boost your savings.
4. Maximize your savings.
Now that you know the best ways to save, look into strategies to maximize your deposits and reach your financial goals sooner. A regular savings account is a good place to start. But unfortunately, these accounts don’t offer the best interest rates. For a higher return on your money, explore other savings options, such as money market accounts, certificates of deposits and online savings accounts.