Becoming more fiscally disciplined need not be painful. Small changes are all it takes to yield big savings over the long haul. By implementing some of these ideas, you will notice the effects right away and your bank account will grow faster than you imagined.
1. Make banks pay you. Utilize comparison websites such as moneysupermarket.com to explore interest rates among different banks and deposit your money with the one that will yield the highest interest rate for your savings.
Explore your bank’s reward programs. Some banks will offer incentives to account holders who consistently maintain bank balances of $25,000 or more. These interest rate percentages can be two or three times what a balance of $10,000 would yield.
Certain credit card companies offer online savings accounts that consistently pay higher yields than the current interest rate to customers who maintain a balance of $1,000 or more. Make sure that the extra savings are not offset by fees for maintaining a balance, however.
2. Some banks offer to round up purchases made using your debit card and deposit that money into your savings account. Furthermore, they will sometimes offer to match deposits up to $250 in a calendar year, or offer other cash incentives for utilizing this sort of savings plan.
You can also schedule regular direct deposits that will immediately allocate money from your paycheck into a savings account each month. You are less likely to be tempted to spend that money if you never see it in the first place.
3. Make payments to yourself. If you are anticipating a large expense, don’t take out a loan or put it on your credit card. Deposit that money into your savings account each month and then pay cash for the item when you’ve saved the full amount. If it is a big-ticket item such as a car, you can save thousands of dollars on interest fees.
Pay down your credit card balances and then pay the balance in full every month. A credit card is a convenient and valuable tool, so make it work for you.
Don’t get caught up in paying unnecessary charges when you can keep a low balance. Simply cutting $1,000 from your credit card balance can save you in the neighborhood of $200 per year in interest payments.
4. There is no substitute for saving money on the outset of a purchase. Do not impulse buy, but instead, research the item you want to purchase and see if you can get a better deal for it somewhere else.
Buy used items whenever possible. Things like books, cars and furniture can all be found in like-new condition, at anywhere from 30% or more below the cost of one that is new. Not only is this fiscally smart, but it helps to recycle things.
Make little lifestyle changes that can save you money every day. Cook your own food. Bring your lunch. Make your own coffee. Buy in bulk. Don’t bounce checks. Just implementing small changes such as these can save $10 or $20 per day that can go straight into your savings account.
5. Make sure you know exactly where your money goes each month. Tracking expenses will have the benefit of showing you the exact places you can cut back.
Of course, you must have money in order to save money. Work towards maintaining a steady income and then look for ways to increase it.
Once you have increased your income, live below your means and pocket the extra money. Most analysts agree that people should place between 10% – 25% of their monthly income into savings.
When you have built up a comfortable monetary figure, decide exactly what investments will yield a high rate of return. Living below your means, saving the difference and wise investing of that money over time will all help you work toward the goal of a solid financial future.
Photo by: Mykl Roventine