Do you always seem to have trouble saving money? If so, you're not alone. According to the most recent data published by the U.S. Bureau of Economic Analysis, the average personal savings rate in America is a paltry 7.9% meaning many Americans are living on the financial edge in terms of having little to no retirement savings or emergency money to fall back on.*
If you're tired of dealing with the stress and instability of having a very thin financial cushion, below are some handy tips to help you maximize your savings.
1. Identify where your money is going.
Your ability to save money will largely depend on your financial self-awareness. If you're not really keeping track of where your money is going each month, you won't be able to identify where your spending might be out of control. While this may not be a pleasant process, it's a necessary step to help you get a better feel for where and how you're spending your money. Once you do this, you can begin to establish a realistic budget that includes regularly setting aside funds in a savings account.
2. Create a realistic budget.
For many people, the word "budget" conjures up feelings of unease, but you have to learn to look at it a different way. Your budget is a spending plan that helps you channel your resources towards productive financial goals. Without it, you may be throwing money down the drain that you could use to get ahead.
While you're setting up your budget, think about how you can cut down your spending in various categories such as: food, entertainment, and utilities. For example, you can choose to bring your lunch instead of eating out three or four days a week or you can explore different options to reduce your cable bill via bundling. As you begin to free up money from these different spending categories, you can direct those funds into your savings account.
Related post: 5 Simple Steps to Creating Your Budget
3. Start paying yourself first.
This is one of the golden keys to saving money. If you try to pay everything else first and then see if you have anything remaining to put into savings, you will almost always have nothing left over. The best way is to take money for savings, right when you get paid. Decide upon a certain percentage of your paycheck and immediately send those funds to your savings account.
Take advantage of automatic transfers in mobile banking to automatically transfer an amount to your savings when you get paid. If you feel like the percentage you're sending to savings is too much in light of your current expenses, don't be afraid to start small. For example, if 10% of your paycheck is too much, go for five percent or even one percent, as you can always increase this number over time.
The amount is not as important as establishing the habit of saving. The goal is to make saving money a regular part of your life, to the point where it's basically second nature.
4. Take advantage of opportunities to jump-start or boost your savings.
For example, you could send a large chunk of your tax refund to your savings account, or if you receive a year-end bonus, that's the perfect opportunity to beef up your savings.
One of the easiest and most effective ways to boost your savings is by using certificates. With GECU's certificates, you can earn even more on your deposited funds over a fixed period of time. By taking advantage of certificates, you'll be earning money with your money, allowing you to increase your savings using a virtually risk-free financial instrument.
Related post: What is a Certificate?
5. Be willing to sacrifice.
When you're looking for ways to maximize your savings, you have to ask yourself what's more important, temporary convenience or long-term financial stability? To effectively save, you may need to "tighten your belt" for a little while to get your spending and savings under control.
If this means cutting back on certain social activities, or taking a "staycation" instead of an out-of-town vacation, it's worth it if it puts you on the path towards financial security. If you're ready to improve your financial well-being, the tips outlined above can definitely get you started on the right track. Whether you're starting early or later in life, it's never too late to begin developing good spending and saving habits, so you can have a more stable and fulfilling financial future.
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*Federal Reserve Bank of St. Louis Personal Savings Rate (PSAVERT)