Tuesday, 15 March 2016
Saving money is always a smart idea, whether it's for emergencies, education, or retirement.
But saving money can be easier said than done. In fact, nearly half of Americans have no savings at all. There are many simple ways to cut down on costs, like taking your lunch to work, skipping the pricey coffee, and turning down your thermostat.
But spending less is only half the battle, and actually getting the money into a savings account can be just as challenging. Here are five real-world ideas for getting your money into a savings account—and keeping it there.
You've probably heard of the concept of paying yourself first. Before you pay any bills or buy any groceries, set aside a portion of every paycheck you get. Even if it's only $25 a week or a month, you're saving money, and most banks make it very easy to set up automatic transfers. Having money automatically transferred out of your checking account and into a savings account is a great way to make yourself save.
Another great way to automatically save is to enroll in any retirement savings program your employer may offer, like a 401(k). This type of saving is even more beneficial if your company matches any of your contributions—which is essentially free money. What's more, the money you save is pre-tax, which ultimately reduces your income tax bill. Even though this is long-term saving, it's still saving.
Many people usually have the tendency to celebrate raises and windfalls by spending money. In some cases, we actually end up spending all—if not more—than the original amount we received. If you get a raise, increase your automatic savings transfer by that amount, even if you're just making ends meet. Since you've proven to yourself that you don't need it to live on, why not save it? The same can go for bonuses, refunds, and other unexpected sources of incoming cash.
You can avoid the tendency to overspend and boost your savings account at the same time by directing all this bonus money into your savings.
It can be helpful to send your automatic savings contributions to an account you can't easily access. Think about opening a savings account at a bank where you do not have your primary checking account.
By law, savings accounts—including money market accounts and the more common savings accounts—limit the number of withdrawals you can make per month. If you're not careful, all it takes is one quick online banking transfer to derail your savings plan. Consider declining to sign up for online banking for your savings account. This can make it harder to raid your savings account when temptation hits.
If you're about to pay off your car loan completely, that means you're about to have an extra couple hundred bucks in your budget each month. If you really want to ramp up your savings, try putting that monthly payment into a savings account. Since you've been living without that amount for as long as you've been paying the debt, you already know you don't need the money to live on. Put that amount, preferably via automatic transfer, into your savings.
There's an app for everything these days, so of course, there are apps designed to encourage you to save. And many of them are free.
With Unsplurge, you set up a savings goal and it helps tracks your progress. It even gives you the option of joining a community of savers who motivate one another to save.
Daily Budget allows you to create a budget and determine how much you want to save each month. It then breaks your savings goals down to monthly, weekly, and even daily amounts so saving doesn't seem so difficult. Then it notifies you regularly to show you how much you've saved. Being able to actually see your success is a great motivator to keep on saving.
Many banks, including BBVA Compass, offer tools designed to help you save through their online banking. Like the apps, the BBVA Compass tool allows you to create savings goals and get regular notifications via email about your progress.
The content provided is for informational purposes only. Neither BBVA Compass, nor any of its affiliates, is providing legal, tax, or investment advice. You should consult your legal, tax, or financial advisor about your personal situation. Opinions expressed are those of the author(s) and do not necessarily represent the opinions of BBVA Compass or any of its affiliates.
Links to third party sites are provided for your convenience and do not constitute an endorsement. BBVA Compass does not provide, is not responsible for, and does not guarantee the products, services or overall content available at third party sites. These sites may not have the same privacy, security or accessibility standards.
So you scored a windfall! But now what do you do with all that hot cash? Vacation? Pay debt? Maybe both.
Do you have an elderly family member and help manage his or her finances? Here are tips on how to help them keep their independence and stay safe.