With the start of the New Year a lot of you guys are probably wondering how to boost your savings. It is a legitimate concern for us, especially in America. Did you know that only 67% of Americans have a budget in place? And, the percentage of people who actually follow the budget that they set in place is just over 30%.
According to Forbes 78% of Americans are living paycheck to paycheck. I really want to focus on how we can fix that and make sure we are setting some funds aside into our savings accounts. Whether it is for vacation, emergencies, wedding, home purchase or retirement here are a few easy ways to save aside some extra cash from that hard earned paycheck and set yourself up for success.
1. Open a Savings Account
It may seem obvious that in order to save money you would need a savings account. However, about 30% of Americans still do not have a savings account in place.
I cannot stress this enough – “saving” money in your checking account does not work. I have seen it fail so many times simply because it is our nature to spend, if we have free access to it. Especially in the era of digitalization it has become so much easier to overspend because we do not physically feel or see that we are spending our hard earned paycheck down to $0, unlike in the old days where cash was the most used payment method and you could see and feel your stack of cash getting smaller and smaller.
This does not mean run to your bank, close your accounts, and only carry cash. It means the opposite. Visit your banker, ask them to work on a budget with you. Most banks can set automatic transfers from your checking to savings or show you how to do it online yourself.
In fact, some traditional banks may be able to give you a decent interest rate on your money depending on your savings balance.
There are also mostly online banks like Discover, Citi, Capital One and I’m sure many more that have not caught my attention that will allow you to open a free savings account with no minimum balance & still pay you a good rate! Remember, you have to start somewhere.
2. The 52 Week Challenge
This savings plan has a pretty simple concept: every week you set aside the dollar amount for the week number. You start at week 1 – you put $1 into your savings; if it is week 35 – you put $35 in your savings. When I first started my career in the financial industry, I thought that in order to successfully save up some money you have to set aside hundreds every week. I could not have been more wrong. Everyone’s budget is unique. If you can afford to set aside $100-300/ week into savings – good for you! Most of us cannot do that, but that does not make us less successful in saving money or budgeting.
What I like about this plan is the fact that even on the last weeks you are only setting aside $52 – never more than that in the whole year. The payoff, however, is huge! By the end of week 52 you will have $1378 either for your vacation/wedding/etc, or to sit and continue to grow as an emergency fund.
If you missed a week or two throughout the year – DON’T get discouraged! DON’T beat yourself up about it! Just go straight to the next week and follow through with the plan next week.
3. Reverse 52 Week Challenge
Just like the original concept described above starts at week 1, the reverse method starts at week 52 with you setting aside $52 into your savings, $51 the next week, then $50, then $49, etc.
The reasoning behind this method is the fact that for some individuals it is easier to start their savings plan with a higher contribution and as the year goes by to decrease the amount coming of the paycheck towards savings, especially for those starting the plan in the first week of January. If you start the original method in January, by the time the holiday season comes around you will have to be making the higher contribution to your savings ($40-$52 per week). And, we all know, presents can get really pricey!
However, if you follow the reverse method, you will only be contributing $1-$12 per week by the time holidays come knocking on your door.
4. Set Up Direct Deposits into Your Savings Account
Most employers nowadays offer the option of setting up direct deposit. It is the most simple, safe, secure and fast way to get your funds from the employer to your bank account. Now, how is this related to savings you may ask? A lot of us know that we can set up direct deposit into our checking accounts, but did you know that most of the times you can request for your employer to set up a percentage or a fixed amount from your paycheck to go into your savings at the same time?
Additionally, if you have access to your payroll company/ paystubs through your HR, you might be able to set that up yourself.
This is a convenient way to consistently set aside a portion of your paycheck throughout the year without having to do anything other than a few button clicks.
5. Negotiate Bills or Switch Providers
Negotiate bills such as your car insurance, TV & internet provider, phone bills. Remember when you signed up for those services and they gave you a wonderful intro rate for the first 6-15 months? And what happened after that? The prices skyrocketed! But, a lot of the times we are used to the fact that it is an intro rate and are expecting increase or are just too lazy to get on the phone and spend time waiting to speak to a person.
Well, let me tell you, it is worth getting on that phone and negotiating your prices down! Even if it is $10 less a month, at the end of the year that saves you $120. Most of the time the savings are higher. When I called my internet/cable company they were able to knock down the monthly price by $30 to keep me as their customer, saving me $360 per year.
If they are not willing to negotiate, switch to another provider. I know that we get used to paying one company, we feel loyal to them, or just don’t want to go through reseting up you bills, but again it is so WORTH it – you will thank me later. Last time I switched my car insurance providers I saved about $2k per year on a family plan! That’s an extra $2000 for you to put in your savings & go on that dream vacation.
Smart With Your Cents 