Need to Boost Up Your Savings? Here Are 8 Ways
Whether you’re saving for an upcoming expense or trying to build up your nest egg, you don’t want to let your savings plan go stale.
Putting away a little money every month is always a good idea. But giving your balance a healthy bump can be a great motivator.
Here are eight ways to boost up your savings.
4 Ways to Revitalize Your Short-Term Savings
Get your savings account ready for any big purchases in the near future.
1. Do the Pantry Challenge
Make a list of all the food you have. Instead of letting cheese get moldy or canned goods collect dust, write down what meals you can make with the ingredients you’ve got.
Now, cancel your next grocery trip and see how long you can stretch the food you have at home. That’s the premise of the pantry challenge. Put the money you would have spent on more groceries into the bank.
2. Take Inventory of Your Closets and Drawers
It’s easy to forget about a pair of shoes in the back of the closet or jeans tucked away in a drawer. Taking stock of what you own will hopefully make you less inclined to buy something new, knowing you already have five pairs like it at home.
Again, what you don’t spend can go straight to savings.
If you come across something you know you’ll never wear or use again (and it’s still in good shape), sell it online for another financial boost to your account.
3. Practice a No-Spend Month
No-spend challenges can be extreme — especially going 30 days without buying anything aside from essentials. But it’s a great way to significantly increase your savings.
One positive about doing this challenge in the spring is that the weather should be nice enough to enjoy outdoor activities that don’t cost money, like hiking or picnicking. Let these ideas for at-home date nights and fun things to do at home with kids serve as inspiration during your spending freeze.
4. Pay Yourself First
Regularly putting money aside each time you get paid will create continual savings growth. If you’ve struggled to scrape money together after bills and other spending, it’s time to do things a little differently.
Instead of saving what’s left over, flip the script and pay yourself first. Yes, before you even pay your bills. Ask HR to split your direct deposit so a percentage of your paycheck goes directly to your savings account, or set up an automatic transfer from your checking account to your savings account each time you get paid.
Watch your short-term savings blossom without any extra effort.
4 Ways to Refresh Your Long-Term Savings
Plant the seeds for savings that help you reach your future goals.
1. Dust Off Your Sinking Funds
Long-term goals can be a beast to tackle. You have to be consistent and stay focused when you’re saving up for something that’s a year or more away.
If you’ve been neglecting your sinking funds — which is just a personal finance term for the pool of money you’ve been adding to — it’s time to get back on track.
Revisit your plans. Do you need to increase how much you’re saving each month? What cuts can you make to your spending in order to do that? Can you adjust your goal’s deadline or the total amount of money you originally wanted to save?
If you’ve been dipping into your savings for purchases unrelated to your goals, consider opening multiple savings accounts and dedicating each account to one specific goal.
2. Assess If You Have Enough Money to Weather a Crisis
You know to plan for rainy weather, but are you also preparing for financial storms that can hit your life unannounced?
Experts recommend having between three to six months worth of living expenses in an emergency fund. Saving that amount can be a long-term mission.
If that seems overwhelming, start with something smaller. A recent economic report suggests about $2,500 for a low-income household.
Figure out what you can comfortably contribute each month to get there, and later work your way up to your six-month reserves. Like your sinking funds, make sure your emergency cash is in an account you aren’t tempted to touch.
3. Make Sure Interest Rates Are in Your Best Interest
Simply put, some savings accounts are better than others. While the average savings account rate is less than 1%, high-yield savings accounts may offer interest rates over 2%.
That may not sound like a lot, but you’ll notice the difference if you’re able to sit on your savings for an extended period.
A money market account is another good option for saving if you want to easily access your cash without the penalty fees you’d incur withdrawing money from, say, a certificate of deposit or your 401(k). Interest rates for money market accounts are often similar to high-yield savings accounts.
4. Increase Your Retirement Contributions
Even if retirement is decades away, saving more now can have a significant benefit — thanks to the power of compound interest.
If you’ve received a salary increase or promotion within the last year, increasing your retirement contributions (rather than giving into lifestyle inflation) is a smart money move. Even if your wages haven’t changed, try adding a relatively small amount toward retirement. An extra 50 bucks a month can have a nice positive effect given many years to grow.
Nicole Dow is a senior writer at The Penny Hoarder.