You need to read this if you aren’t satisfied with your current savings rate.
- Saving more money can be a challenge, but you can take a few key steps to increase the amount you save.
- Consider making one big lifestyle change, paying off debt, or automating your savings.
Saving money is absolutely crucial to building financial security. After all, you need to have extra cash to invest, make big purchases, or simply not end up reaching for the credit cards any time an emergency strikes.
It may feel like a huge hurdle to try to put more money into your savings account — especially if you are already stretched thin. The reality, though, is almost anyone can find a way to boost their savings rate (at least a little bit). These five tips can hopefully help make that happen for you.
1. Make one big change
Often, it’s the big stuff that takes up most of your budget. Your car and house payments, for example, probably eat up a far larger percentage of your income than whatever small indulgences you enjoy. Yet, when it comes to looking for ways to cut spending, many people often chip away at the little costs.
This can be a misguided approach because cutting tons of little expenses is hard to sustain and may not have a big long-term impact on your savings anyway. Rather than doing this, look at those big expenses and see if you can make one change that will be easy to stick with and give you lots of extra cash. For example, selling your current expensive car and getting a cheap used one or moving to a less-expensive apartment could free up tons of money to save.
2. Evaluate your memberships and subscription services
There are so many subscription services out there now, for everything from streaming music to vehicle theft protection to video doorbells. All of these different monthly costs can really add up and may not be necessary. So, take a look at your credit cards and bank statements to see what programs you’re a subscriber to or a member of.
If you spot anything on your list that you aren’t actively using and getting value from, cancel it and redirect that money directly into savings instead.
3. Deal with your debt
If you owe a lot of money, every dollar you’re paying toward it is money you cannot save for your future. So, try to create a proactive plan for paying down high-interest debts.
You can also look into whether refinancing or doing a balance transfer could work for you. If you can lower your interest rate and monthly payments, this could free up cash you can save.
4. Set detailed savings goals
If you want to be successful at saving more, it’s helpful to know exactly what that means to you. You should try to be as specific and detailed as possible in establishing your goals, as this makes accomplishing them much more likely.
5. Automate your savings
Finally, making saving money automatic will significantly increase the chances you’ll stick with your plan to invest more for your future. Once you set up the transfer of funds to savings, it becomes more effort and a conscious choice to cancel it — and many people won’t do that.
By following as many of these five tips as you can, hopefully you can significantly increase your savings rate in 2023. It may seem challenging, but it’s worth the effort to end up with a bigger bank account balance in the new year.
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