5 Simple Strategies to Boost Your Savings
Ideas for Putting Away More Money Every Day
Chase is celebrating National Savings Week January 22nd through January 28th. Our series aims to provide tips and insights for saving today, tomorrow, and in-between.
You've given up the daily $2 coffee and mastered the art of brewing it at home. Your grocery bill is cut by a third because you've become efficient at weeding out non-essentials. And your budgeting spreadsheet is pristine and up to date. You're even using those handy "tracking tools" on your credit card account to see what you spend month-over-month. Now it's time to make sure the money you're saving is actually added to your savings.
Here are some of the best ways to do that:
1. Automate, Automate, Automate
"Automation is the new discipline," says Tiffany Aliche, author of "The One Week Budget" and TheBudgetnista.com. "Automating a specific savings amount each pay period is one of the most effective ways to save."
Aliche says that by setting up automatic weekly or monthly transfers from checking to savings, you can override your emotions and create a system that works even when you're not paying close attention.
Donna Skeels Cygan, CFP, president of Sage Future Financial, LLC and author of "The Joy of Financial Security," agrees that automation can not only make your life simpler, but make saving painless.
"As soon as you commit to how you want to free up dollars for saving ... make the savings automatic," says Cygan.
2. Set Savings Targets and Increase Them Slowly
One of the best ways to motivate yourself is to set small goals, then gradually raise the bar when you hit them.
"The key with making small changes is that unspent money needs to be swept away," says Cygan. She means literally putting it away: You might start by trying to accumulate $10 in cash in a jar in the kitchen each week, she suggests.
Soon after, it'll be time to move beyond that, to higher dollar amounts and to automatic transfers. Start small, with a weekly savings goal of perhaps $20-$30, and then raise it by $10 increments when you can later in the year.
3. Distance Yourself From Your Funds
The harder it is to access your money, the higher the likelihood that it'll remain in savings. Consider putting funds into an account that doesn't come with a debit card, or one that's designed for a longer-term investment. If it takes more effort to spend than simply swiping a card, you may be more likely to hold onto it.
"Creating distance from your money makes it inconvenient, and inconvenient money gets distance," says Aliche.
4. Segment Your Savings
To gain a better understanding of your savings and possibly increase your motivation, divide your savings into segments. You can do this with separate accounts or by keeping track of one account on your own. Use categories such "emergency fund," "retirement savings," "car savings," and "vacation" to solidify short- and long-term goals that'll help you stay focused, says Aliche.
"Separating your savings will help you avoid accidentally spending money designated for something else," she says. "When you check your account and see your money in its designated savings account, you'll get a quick overview of how well you're doing." That emergency fund can also give you flexibility if you find yourself in a situation where you have to choose between relying on a credit card and drawing from your savings.
5. Stay Connected to Your Finances
To reach your long-term savings goals, it's imperative that you stay on top of your finances. Review your credit card statements to understand where you're spending your money and use those insights to guide the next month's expenditures.
Commit to the idea of taking one small financial baby step a day – read an article, put aside some money, update your financial vocabulary or arrange a meeting with a financial advisor.
Do one small thing every single day, and in a few months, you'll start seeing a discernible difference, says Cygan. "Saving is far more important when working toward financial security than having a high income or any specific investment decisions."
With each little step, you can move closer to achieving a sound financial future.
Photo: RooM/Getty Images | Mridu Khullar Relph is a London-based freelance journalist whose work has appeared in a variety of publications, including The New York Times, TIME, CNN, ABC News, Ms., Marie Claire, Elle, Cosmopolitan and more.