In an uncertain economy, having a meaty savings account is critically important. You never know when you might lose your job or when some other economically taxing situation will befall you, so you want to be prepared for such times.
Fortunately, there are many simple methods that can be employed in order to build up a savings account. Here, we’ll discuss the top nine ways to do so.
Make a budget and stick to it.
Identify how much money you need every month for basic living expenses – this will include rent, food, utilities, cable/Internet, some budget for fun, etc. Then, with the money left over, identify how much of your paycheck you can save each month – and be sure to actually do so. If you create a budget for yourself and are committed to it, building up your savings account is easy.
Refine your budget.
Assess and refine your budget with each passing month. What did you spend last month, and was it necessary? Could you have saved more?
Apps like Mint are fantastic tools in helping you to track your expenses against whatever budget you have set. Mint can also help you evaluate where you could be making healthy financial modifications in your life. Seeing the numbers on a stark screen in front of your face can sometimes be just what you need to make some changes.
Automatically send some percentage of your paycheck to savings.
Just as you route some of your paycheck to your 401(k), and some of it into your checking account, you can also route money from every paycheck into your savings account. This is the surest way to avoid spending that extra money, and if you’ve built your budget properly, you won’t miss the money anyway.
Pay bills in a timely manner.
The surest way to lose your hard-earned money and do the opposite of saving is to not pay your bills on time. Late fees and finance charges can add up quickly, and your credit can also be negatively impacted when bills aren’t paid in a timely fashion. Everything from utility bills to rent to doctor’s office fees should be paid when they are due, and no later.
Pay your credit card bill in full every month.
Finance charges can accumulate quickly when your credit card bill is not paid in full. You should have at least one credit card on hand so you can start building credit, but we recommend defaulting to the use of your debit card so that any money you spend is coming out of your checking account as opposed to being incurred as debt.
It’s what your mom used to do, and for good reason. Clipping and utilizing coupons is a great way to save money. Innovative services like Common Kindness allow you to print coupons online and indicate a non-profit to which Common Kindness will donate some percent of whatever product you buy. You can also find coupons in newspapers and magazines, and at websites like Coupons.com.
Save that change.
Every time you pay for something with cash, there is likely to be some change generated. It jingles in your pocket, gets shoved in drawers, and gets buried in seat cushions.
How about taking a proactive approach to saving every nickel and dime that comes into your hands? Save your change in a jar or wherever it is convenient to do so. Every time the jar is filled, bring it to CoinStar or to the bank and deposit that money into your savings account. It’s that simple!
Consider a supplemental income source.
Is your job not paying you enough to allow you to save? There are a number of ways to supplement your income. One is to consider getting a roommate. Having a roommate, or renting one of your rooms or your couch out via a service like AirBnB, can help you save $1000/month or more if you have a decent-sized extra bedroom or appropriate accommodations.
Consider also the idea of moving home with Mom and Dad for a little while to save up some extra cash. According to Bloomberg, “about a quarter of American adults between the ages of 18 and 30 now live with parents.” This is partly because of the difficult job market young adults are facing. But it is also because some of the savvier people are taking the opportunity to build up their savings by not having to pay rent. Living with one’s parents can also mean cost savings on everything from utility bills to the cost of food.
Don’t TOUCH your savings account.
Your savings account is just that – to retain savings, and not to spend. Don’t allow yourself to touch the money you are putting into your savings account. This can take some real discipline and self-restraint, but you truly never know when you will need it. Consider also that spending your savings is counter-intuitive in every way!
There are many quite simple methods for building up one’s bank account. The most important thing is to be consistently mindful of when and where you are spending your money. It can so easily be squandered, but by paying attention to and maintaining a budget, allocating a specific amount every month into savings, and not spending it, you’ll see that savings account grow significantly with each year that passes.
Do you have great tip or app for helping to build up a savings account? We want to hear about it!