Saving your way to financial stability and freedom relies heavily on good money habits. Whether you’re starting from your first job or with a high income, a healthy saving habit will carry you a long way. The first step of saving is to know where your money is going and to craft a budget that balances your expenses with your income and saving targets. Let’s look at some easy money saving tips that will help you build into your lifestyle, reliable saving systems.
Try a Monthly ‘Savings Spree’
A savings spree is a motivating way to save a chunk of money, especially when you’re considering how to budget for your first home or save for your down payment.
Make saving fun by treating it like a challenge with goals, targets and rewards.
An example of a saving spree is to save a dollar equivalent for every day of the month–1$ on the 1st, $3 on the 3rd, $15 on the 15th, and so on. By the end of a 30 day calendar month, you will easily have saved $450.
You can tailor this approach to your budget and income. Increase or reduce the amount you set aside and enjoy challenging your frugal side. You might surprise yourself.
Another way to do the ‘saving spree’ challenge is to double the previous week’s amount in subsequent weeks.
- Week 1: $5
- Week 2: $10
- Week 3: $20
- Week 4: $40
Carry this “savings spree’ for as long as you can. In eight weeks, for example, you will have saved $1,275. Even with a starting amount of $1, you can still save thousands.
What to do:
- Get a saving partner or friend who will provide a healthy competitive environment and hold you accountable.
- Pace yourself. Saving sprees are as much about the saving as they are about the fun challenge. If you can only keep it up for a few weeks or you want to do it for the long haul, do what works for you.
- Set a reward. Once you hit the target week, find a reward within your budget that will make you feel better about sticking to the challenge.
Automate Your Savings
Our bodies and minds are hard-wired to seek the path of least resistance, often linked to pleasure. You can control this pleasure-seeking monkey brain by taking difficult choices out of your hands.
This is where automating your finances comes in. If you avoid the decision fatigue that comes with doling out weekly or monthly amounts, you’ll save a lot more money with less hassle. It will also minimize the temptation of spending the money instead.
What to do:
- Pay yourself first by setting aside a manageable, fixed amount that automatically transfers from your checking into your savings account or emergency fund.
- Set up banker’s orders for big regular payments such as rent and loan repayments.
- Use credit card autopay to pay a fixed amount, the full balance, or the minimum amount due.
- Get a budgeting app to help track your bills and goals, invest and manage your money well. Some of the best budgeting apps in 2021 include Mint by Intuit, PocketGuard, and Personal Capital.
By paying recurring bills on time, you save a considerable amount from unpaid late fees. Debt management apps will not only help you pay on time, but they will also help you improve your credit score before buying a house or any other big purchase.
Make Your Savings Account Work for You
One of the best money saving tips. The higher your savings amount and the less access you have to it, the higher the annual yield will be.
While a high yield online savings account can offer you 0.04% APY (annual percentage yield), a certificate of deposit (CD) can offer you 0.07% APY for a 1-year period. This interest rate could go up to 1.15% for longer saving periods.
The catch is that banks usually require a minimum deposit to open a CD that can be in the thousands.
This is where other kinds of savings come in. You can use shorter-term savings as your emergency fund or to build up a sufficient amount for a CD.
Some banks, such as credit unions, often offer a higher yield relationship rate if you link your checking and savings accounts.
Since such banks often have higher fees and larger minimum checking-balance requirements than online banks, this relationship rate only works if you have an existing relationship.
The point is to look into interest rates and perks open to you wherever you bank and find the highest APY and lowest fees.
So far, the easy money-saving tips we’ve discussed have focused on how to put money away. However, if you’re maxing out your income every month, you must wonder how to save money.
How can you free up money to boost your savings?
Trim off the Excess
Each person’s excess looks different. To one person, a music streaming subscription might be expendable while to another person, it might be essential to their work or well-being.
Here are some excellent areas to trim off the excess spending:
- Evaluate your subscriptions. You don’t need to have Hulu, Netflix, HBO Max, Disney Plus, and Amazon Prime Video. Choose one and cancel the rest.
- Consider eating out a treat rather than the norm. Instead of buying coffee and lunch when you’re at work or ordering in, embrace meal planning and homemade meals.
- Avoid ATM fees by paying with your debit card and withdrawing from your own bank network. Make sure your bank doesn’t charge you ATM fees or keep withdrawals to the minimum frequency required.
- Get a cheaper cell phone plan. If you’re home and already paying for Wi-Fi, you don’t need to pay for the most expensive data plan available.
- Coupon codes and cash back apps can save you up to $30 per weekly shopping. That could add up to more than $1500 in annual savings. Honey and Rakuten Rewards (formerly Ebates) are just two of many such tools available to help you save as you spend. All above mentioned are top money saving tips recognized.
With these straightforward tips, you can begin your savings journey. Consider consulting a financial professional from The Credit Pros to help you improve your credit and get free of debt.