A surprising amount of working Americans have little to no savings, nor do they have a working budget. There are multiple reasons savings and budgeting take a backseat when it comes to household finances. These reasons include living paycheck to paycheck, spending more than your means, the time it takes to make and keep a budget, and worry that they will have to give up their lifestyle to save, to name a few. The truth is making a budget and saving is easier than people think, and there are some things that people can do to decrease expenses and increase savings. Here are five easy ways to increase your savings that you won’t even feel.
Make a Budget
Making a household budget is not as challenging as most people think it is. Gather all your expenses and sources of income and use a spreadsheet or even a calendar or planner and input the amounts in categories that make sense to you. Some free online budget templates will help make this process simple. The vital part of the budget is that you add savings to your expenses and make it your most crucial expense. Financial planners and advisors agree that if you pay yourself first by making savings a priority, all other financial responsibilities will benefit because you will be more thoughtful about spending.
Make it a Habit
Saving money is just as much a psychological endeavor as a physical one. Most don’t save because they think it is too difficult or that they don’t make enough money to spare some of it to save. The truth is no matter the amount you save, just doing it regularly, even if a few dollars, will build a savings habit. As you find more places in your budget where you can spend less, you will already have a savings habit and grow the amount you have saved more quickly.
Make it Automatic
Most banking institutions not only have savings accounts, some that even gain interest. They also can directly deposit a portion of your paycheck directly into the account. Setting up a direct deposit and allocating a certain amount to be deposited into your savings account each payday does a few things to boost your savings. It helps with the psychology of saving because the amount is not in your main account of disposable income, and often people don’t miss it and budget accordingly. It also sets a certain amount of savings that is consistent and can add up quickly.
Seek Extra Income
When you are working on your budget, you must find places you can cut spending and put 100% of that money into your savings. If you cut out some unnecessary expenses, you might be surprised how fast your savings grows when you transfer those funds into your savings account. When considering your budget and savings, you may also want to consider earning more income through side gigs or other income streams such as investments. It is easier to find side work in our gig economy that doesn’t take too much of your time and can generate enough income to build your savings fast.
Use Company Benefits
Most people who work for corporations are aware of company savings plans like a 401(k). Generally, it is talked about in your orientation. Still, employees often don’t understand exactly how it works or what contributing to company savings and retirement plans can achieve their savings goals. A significant amount of the companies that have a 401(k) also have a matching program. When deciding on what percentage of your income to contribute, consider contributing the percentage your company will match. If your company matches up to say 10%, you should be contributing at least 10% of your income. You can, of course, contribute as much as you can afford. Remember, however, you won’t have easy access to the savings with this type of account, and when you do pull money out since it is not taxed going into the 401(k), it will be taxed upon withdrawal.
Conclusion
Budgeting and having savings are the most crucial part of your financial health and future. Using these five easy ways to increase your savings will have your savings account fat in no time!
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