10 Effective Tricks for Saving Money
Saving money can be hard for a number of reasons. Often, there is not a large margin between what most people earn and what most people spend. Without some type of strategy, that little bit that’s left over every month can be spent all too easily.
Cutting back on your expenses is a great way to start saving money. However, if you’re searching for ways to tuck away a bit of extra savings, these tricks might be the solutions to your saving problems.
Find the Bonuses
Of all the ways to save money, this might be the easiest: Let a company pay you for your business. If there’s a service or tool you’re already using, why not earn bonus money at the same time?
Why This Works
The cash bonus can help you achieve your financial goals faster.
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Automate Your Savings
Perhaps the simplest way to save without even thinking about it is to set up an automated savings plan. Most financial institutions allow you to set up regular transfers from your checking account to a savings or investment account.
Why This Works
Automation is a great way to save because it can be hard for most people to remember to make a savings deposit, let alone finding the will to do it. Automated transfers take that job out of your hands. To save even more, consider transferring your funds to a high-interest savings account.
Increase Savings Incrementally
Once you’re on an automated savings plan, the way to really build your savings is to increase those savings by 1% every six to 12 months. For example, if you’re setting aside 10% of your paycheck, reset it to increase by 1% to 2% the following year, and every year thereafter.
Why This Works
In such small increments, it’s easy to adapt to the higher savings level. And, before you know it, you’ll save a large portion of your paycheck automatically.
Keep the Change
If you don’t feel comfortable turning over your financial monitoring to an app, no problem — keep the change yourself. Whenever you come home, whether from a hard day at work or a fun night out on the town, toss whatever change you find in your pockets into a jar.
Why This Works
Most people don’t like carrying change anyway, so this trick kills two birds with one stone. You’ll lighten your pockets, and before you know it, you’ll have lots of spare change saved up that you can deposit into a savings account.
Bank Your Bonuses
This trick involves rewiring your brain to think of extra money as exactly that. Anytime you get a raise at work, a year-end bonus, a cash recognition award or any type of financial gift — put that money immediately into savings.
Why This Works
If you’ve already been getting by on the money you’ve been earning, you don’t really “need” to be spending this extra windfall. Instead, most people are likely to blow a paycheck on “wants.” You can certainly use some of the money as a reward just to satisfy that urge, but the bulk of it should head toward your savings.
Name Your Goals
If you give one of your savings goals a specific name, such as “Tahiti” or “Maserati,” you might be more likely to try to hit that savings target.
Why This Works
Naming or defining goals could help you move in the right direction and has proven to be more effective than simply putting money toward that vague category of “savings,” according to a behavioral finance concept called “mental accounting.”
Pay Yourself First
To really make savings a priority, don’t think of savings as an optional activity. Instead, make it one of your monthly bills, just like rent or your car payment. Also, make it your first priority.Pay your savings account before you do anything else. Then, learn how to make do with the money you have left.
Why This Works
When you treat paying yourself like a bill, this ensures that no matter what happens in a given month, you hit your savings goal. You’ll hit savings goals even faster if you put your funds into a high-interest savings account.
Use a Cash-Back Credit Card
Cash-back credit cards give you an immediate refund on your purchases, typically in the range of 1% to 2% but occasionally as high as 5%.This savings tip is a bit trickier than the others, as you’ll have to be disciplined enough to pay off your entire balance every month to avoid interest charges. Play it safe by simply using your card for cash back and paying it off immediately.
Why This Works
As long as you pay your balance on time and in full, you’ll be getting free money just from making purchases as you normally would. Although 1% to 5% doesn’t seem like much, it can really add up over time.
Make Access Difficult
Convenience is great, and most banks now allow you to access your funds 24/7 — whether via a telephone call, a smartphone app or a web page.
However, being able to access your money so easily can be dangerous for some people’s spending habits. A good way to save money if you have issues with that is to make your money hard to get to. One option is to open an account with a smaller bank all the way across town. This way, you have to drive to the bank to get cash out unless you want to potentially deal with ATM fees.
Why This Works
If you have to work hard to get your money, it can help dissuade you from spending that money on frivolous purchases. You might even decide you don’t need to take out that cash by the time you get to your cross-town bank.
Start a Competition
If competition is something that fires you up, get a savings buddy and set up a contest. Establish savings parameters and see who can stick it out for the distance.The winner can get a nominal prize, such as a free lunch, or you can just award a badge of honor, so the savings game doesn’t cost anything.
Why This Works
Some people are competitive in nature, so this is a productive way to make use of that trait. No matter who “wins” this competition, you’ll both be winners, as you’ll have saved during it.
Keep Budgeting for Loans You’ve Already Paid Off
If you’re about to finish paying off a student loan, car loan, mortgage or credit card debt, congratulations! But before you start spending that money elsewhere, consider putting it right into savings each month.
Why This Works
If you’ve been paying off this loan for several months or years, you’ve already found a way to fit this monthly loan payment into your budget. When that payment goes away, simply put that same amount into your savings account every month. You’re already used to spending that money every month so you won’t miss it.
This article was provided by MoneyLion.com for informational purposes only and should not be construed as financial, legal, or tax advice.
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