Are you one of those people that avoids looking at their savings account balance? If so, you're not alone. Having very little or no money saved at all is quite common among American adults. In fact, 35% of adults only have a few hundred dollars saved, and 34% have nothing saved at all.
Not having a savings account may not have impacted you yet, but it's only a matter of time until a financial emergency happens and you're left strapped without any money. Saving may seem like it's all for nothing, but putting money away helps to create a financial cushion that you one day may very well need.
Here are 5 ways to boost your savings account.
1. Figure Out Where Your Money is Going
Before you can start building a savings account, you'll need to be more self-aware of where your money is going on a monthly basis. This involves taking an honest assessment as to where you spend your money. While you may not want to see or admit that you spend a good part of your paycheck on food and entertainment, a true understanding will help you make better financial decisions.
To get a good idea of how much money you're spending and where, create a budget. Budget planners and debt pay off budget planner are easily found on sites like Get Out of Debt. Determine how much income you have coming in and see where you're spending it. Budgeting can be intimidating, but with the help of a mobile app, you can see where your money is going, set financial goals and get automated alerts.
2. Cut Spending
Once you have a good idea of where your money is going, find ways to cut expenses. This allows you to have more money to put aside into a savings account or to use to get out of debt. While you could work another job to increase your income, it's much easier to cut costs. Simple but effective ways to keep more money in your account includes:
- Eating out less
- Reducing energy usage
- Bundling at-home entertainment
- Trimming cell phone plan
As you reduce your spending, you can set savings goals. If you've never saved before, putting aside $50 or $100 is a huge accomplishment. While it may not seem like a lot of money in the beginning, over time, you'll find that you can easily save thousands of dollars. Stick to your goal and be consistent.
3. Set Up Automatic Deductions
Physically transferring money into a savings account is no easy feat, especially when you've got a certain purchase on your mind. Instead of relying on yourself to put money into your savings account, work with your employer or your bank to schedule an automatic deduction so that the process is effortless. With automatic deductions, you can choose to put a set amount of money into your account or you can put aside a certain percentage of your paycheck.
This means that twice a month money will go into your savings account without you having to do a thing. Over time, you'll start to earn interest on the money in your savings account, which is an added benefit. As your savings account starts to grow, you may want to switch to a bank that offers a high interest rate so that you can earn more on your money.
4. Invest Your Money
Having money in a savings account is important, but you'll also want to have money that's saved for the future. In your younger years, saving for retirement is crucial. Waiting to save can make it impossible to put aside the money that you need to live comfortably after retiring. As you get onto better financial grounding, be sure that you're not only putting money into a savings account but also into a 401k or IRA.
Investing creates more financial stability for the future. When you start to invest money, be sure to adjust your budget so that you aren't left strapped for cash.
5. Increase Your Income
Though it's much easier to reduce the amount of money you spend in order to have more to save, another option is to increase your income. The Internet is the perfect place to make more money from the comforts of your own home. Online you can pull in more cash by:
- Taking surveys
- Writing product reviews
- Posting ads
- Offering a side-gig
Aside from online work, there are plenty of other ways to get more cash in your pocket. Consider lawn services or pet sitting in your community. Or, sell household items that you no longer need for cash. While you won't make thousands of dollars, having an extra hundred dollars can come in handy when you're focused on saving.
By boosting your savings account, you'll have a much better financial grounding to prepare yourself for any financial issues that may come your way in the future. Follow these 5 steps so that you can have financial assurance and stability.