If You Have Less Than $5K in Savings, These 5 Steps Will Get You There
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When you log into your bank account, how do your savings look? Probably not as good as you’d like. It always seems like an uphill battle to build (and keep) a decent amount in savings.
But what if your car breaks down, or you have a sudden medical bill?
If you have less than $5,000 in savings, you have work to do. We’re not judging — we don’t roll like that. We’re here to help. We just don’t want you to have to sell those Elvis-Presley-signed velvet pants you inherited just to pay some lousy plumbing bill. Those pants are sweet.
Try these five tips to get the ball rolling, and start building up your savings so you can breathe a little easier.
1. Open a Separate Banking Account
Operating everything out of one checking account can make your finances muddy and contribute undue stress to your money management, especially when you’re trying to set some aside.
To simplify, open a second account for a dedicated purpose. One of our favorites is the Aspiration Account — there are no monthly fees, and you’ll earn up to 100 times the interest rate of other banks.
This online-only account comes with a debit card and free ATMs, so you can easily access your money when you need it.
After you open your Aspiration Account, use it to split your income:
- Automatically deposit a portion of your income into your existing bank account, and use that to cover basic expenses like rent and bills.
- Deposit what’s left into your Aspiration Account to put toward your savings goal.
2. Let This Company Pay off Your Credit Cards
When you think about how much debt you have, you might feel a little anxious.
That’s where a company like Fiona can be helpful. It can help you find personalized lending options to refinance or consolidate your debt to potentially save thousands of dollars in interest.
Fiona will show you all the lenders willing to help you pay off your credit card and eliminate the headache of paying bills by allowing you to make one payment each month.
If your credit score is at least 620, you can borrow up to $100,000 (no collateral needed) and compare interest rates, which start at 4.99%. The idea is to secure a loan at a lower interest rate, potentially helping you save thousands. Repayment plans range from 24 to 84 months.
Take, for example, Katherine, who faced $12,000 in credit card debt. Holding her back? The 15.24% interest rate. By refinancing with a 5%-interest, seven-year personal loan, she saved $12,000 in interest.
If she’d kept on the same road, she would have paid something like $14,000 in interest alone over 25 years. Yikes.
So even if you’re simply curious about what’s out there, know that checking rates on Fiona won’t hurt your credit score — and can probably save you in interest.
Money you don’t spend on that interest is money you can put toward your savings. Then it can earn interest for you. Switcheroo!
3. Get Control of Your Money With a Budget
Budget. There. We said it, and it wasn’t so bad, was it? Budgeting can be a little scary, but it doesn’t have to be. And… we all need it.
The first step is to find out how you’re doing now. Luckily, you can have a financial assistant right in your pocket to help you out.
The Empower app is a powerful budgeting tool that can help you figure out how you’re spending your money and develop a budgeting plan to keep you on track.
Link the app to your bank accounts, and it will track your spending. It will also categorize your spending, so you can see exactly where you are overdoing it. That’s right: It will show you just how many times you went out for dinner because you didn’t want to do the dishes.
Set a monthly spending limit and the app will show you a graph that can tell you in one snapshot just how you’re doing for the month. Are you over the line or under it? It’s that simple to see how you’re doing so you can adjust your spending accordingly.
Sometimes a little accountability is all you need. Quit tweeting, and use your phone for something better, like finally learning how to budget.
Once you have your finances under control, it will be a lot easier to see where you can find a little extra to slide over to your savings account.
4. Be the Change You Want by Investing Change
Wouldn’t it be nice if you could just start saving without even really trying? You can.
If you like easy, consider starting an investment account through Acorns.
You can start small and stack up change over time with its “round-up” feature. That means if you spend $10.23 at the grocery store, 77 cents gets dropped into your Acorns account.
Then, the app does the whole investing thing for you.
The idea is you won’t miss the digital pocket change, and the automatic savings stack up faster than you’d think. For example, we reviewed how Penny Hoarder Dana Sitar was able to save at a rate of $420 a year!
At that rate, you could set aside $1,000 in about two and a half years — without trying.
The app is $1 a month for balances under $1 million, and you’ll get a $5 bonus when you sign up.
Saving doesn’t get any easier than that.
5. Let a Robot Negotiate Your Bills Down
Why aren’t you saving more? Because you have a lot of bills, right?
The price of internet — and cable, if you’re still into that kind of thing — certainly isn’t decreasing. If anything, prices are steadily climbing.
And if you’ve had to chat with a representative from your internet/cable company recently, you know how long you can sit on hold.
That’s why it’s time to call in a robot. The negotiation bot Trim will negotiate your cable or internet bills down for you.
It works with Comcast, Time Warner, Charter and other major providers.
You can sign up simply with Facebook or your email address. Then, upload a PDF of your most recent bill, and Trim’s AI-powered system gets to work. If at first it doesn’t succeed, it’ll keep negotiating until it can save you some money.
Also, if you have any outages, Trim believes you deserve a credit, and it’ll handle that for you. Trim takes 25% of the savings tab, and you get the rest.
When you save money on bills, you have money to put into savings. This is easy, folks.
Think Small, but Dream Big
It’s tempting to just shrug and say, “I can’t afford to have a savings account.” Sure, you think you’ll plop that $1,500 tax-refund check into savings. But those big windfalls also come with big temptations.
If you can find a way to save just $5 each day, you’ll be $1,825 richer in a year.
Having $5,000 in savings isn’t some magic number, but it’s a great starting point. Use these five tips and you’ll be amazed how fast you can get there. You’ll sleep better knowing you have that cushion.
Then, you’ll start dreaming of $10,000. Am I right?
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