Having ample savings is important to a stable financial future. As always, the difficult part is putting smart financial concepts into practice. If you find yourself living paycheck to paycheck, it’s difficult to reduce your take-home pay further by putting it into savings.
Thankfully, even the smallest of contributions can have significant impacts on your financial future. There are several small actions you can take to add to your savings without it being a burden on your day to day finances.
Try these 7 simple tips to effortlessly boost your savings:
1. Make small automatic deposits.
If you live like most Americans, you likely use all of your paycheck each and every pay period. In fact, most Americans live beyond their means and accrue debt beyond what they can afford to pay out of pocket. You can help to break this trend in your life by having a small amount automatically deposited into your savings account each week, 2 weeks, or every month. Most banks have a system for setting up automatic transfers. The day your paycheck is deposited, have a transfer scheduled to go directly to your savings.
• Even just $5 a week, it will add up over time. In one year that’s $260 and over $1,000 every 5 years. That might not sound like much but try doubling the amount every quarter. $5/week for 3 months, $10/week for 3 months, $20/week for 3 months, and $40/week for 3 months. Every little bit adds up!
2. Pay with cash whenever possible.
When you pay for your everyday expenses with cash, you’ll actually “feel” the money coming out of your pocket as you hand it over to the cashier. Drop the change from these transactions (round up to the nearest dollar) into a jar when you get home. Before you know it, you’ll have a significant pile of change ready to go into your savings account.
3. Round up credit card transactions.
Some credit or debit cards will round up the dollar amount of each purchase and deposit the balance into a savings account. It’s the same concept as the change jar, but without having to lug around the physical weight of so much change. Having it all happen online is much easier.
4. Add up your spending.
Add up every single dime that you spend. It doesn’t matter how you’ve made the purchases – using cash, credit, debit, etc. Analyze your expenses looking for significant recurring expenses that you don’t need. There is always something you could live without. Adding that small expense to your savings instead, will pay back your future self much more.
5. Avoid impulse buys at all costs.
When you feel the urgent need to buy something that’s not on your shopping list, give yourself a 24-hour cooling off period. A week would be better. After that time, see if you feel that you really need it. You’ll find that often times, once you bring home a new purchase and take off the tags, the euphoric feeling goes away and it will turn to guilt. This is good! Think of this feeling the next time you want to buy something and use it to restrain yourself.
• Only when you’ve thought about it over and over and still feel the need to buy should you make the purchase. And if you’ve got a great deal, reward yourself by putting the savings you made, into your savings account.
6. Avoid credit cards if you’re not disciplined.
If you can’t pay off your credit card in full every month, stop using your credit cards immediately and switch to cash or debit cards.
7. Reduce your everyday needs.
Evaluate your essential expenses such as internet, phone, and groceries bills. Find ways to reduce these bills.
• Switch to a lower cost phone plan or start clipping coupons at the grocery store.
Change is best implemented gradually, so don’t feel pressure to do it all at once. Just remember that just a couple of cents each and every day can go a long way. Slow and steady wins the race!