Seven Tips to Build Your Savings
What are YOU saving for? The first step in building your savings is to start with a goal, such as:
- Retirement/nest egg
- Holiday gifts
- A vacation
- Future car maintenance
- Home purchase
Establishing emergency savings is one of the most important savings goals. It’s crucial to build up an emergency fund to avoid debt and have a safety net in case of reduced income or increased expenses. Aim for at least three months’ worth of expenses in your emergency fund. If you don’t yet have that amount, keep adding to that account.
There are different timelines for savings: short-term, medium and long-term. You also might have more than one goal at the same time on separate timelines, such as holiday gifts (short-term), emergencies (medium) or retirement (long-term).
How you save is not one-size fits all; below are seven ideas to help you save more. If one method doesn’t work, find the best one(s) that work for you.
1) Make your money work
- Choose an account with the highest interest rate you can find. Rates are low right now, but they’ll increase again – every penny helps!
- When choosing and account, watch for minimum balance fees, monthly service fees, and limits on transactions per month.
- Set up an automatic transfer from your checking to savings each month. Better yet: adjust your direct deposit to send part of each pay check directly into savings.
3) Set aside any additions in income
- If you receive a raise or a bonus — and congrats if you do! — adjust your direct deposit to send the additional amount to savings.
- Can you work extra hours? Send some (or all) of the extra cash to your savings instead of your checking account so that you don’t spend it all right away.
- Did you get a tax refund this year, receive mileage or other reimbursement check, benefit from a cash gift, hold a garage sale, or sell a large item? Boost your savings with that extra money.
4) Keep the change
- Save your change and deposit it into your savings account rather than spending it.
- If you get paid every two weeks, you’ll get a third paycheck two months each year! Send as much of that “extra” paycheck you can to savings.
5) Be creative with gift cards/cash redemptions
- Treat a gift card like it’s already in your checking account. If it’s affordable, reduce your spending by the amount of your gift card and add that amount to savings. Then spend the gift card.
- If you don’t intend on using the gift card, think about selling it, trading it, or regifting it, then add the value to your savings. Be sure to do that with people you trust and not a website that says they’ll do it for you.
- If you get cash back from using certain debit/credit cards (while avoiding accruing debt, of course!), put that extra cash in savings.
6) Make saving into a game
Reward yourself by adding money to savings whenever you choose to spend less. For instance:
- If you skip ordering an appetizer when getting take out, add $10 to your savings.
- Make your own lunch every day during a work week instead of dining out. Then add $50 to savings to reward yourself.
- Make coffee at home and skip the coffee shop. Add $4-6 to savings, depending on how much you normally spend.
- These reductions can be temporary until you reach the savings goal of your choice.
7) Read what my colleagues have to say
- Want more savings ideas? My colleagues have written blogs on:
Regardless which method you choose, make savings a priority. You’ll feel so much better going on that vacation, taking care of that car repair or buying those holiday gifts when you pay for them with savings instead of going into debt.
Author Nadine Gall is a Certified Financial Counselor with LSS Financial Counseling.