It is important that you have money set aside to pay for an emergency car repair or to get through a job loss. While everyone knows the importance of saving, it can still seem like a daunting task to actually keep anything in the bank. Fortunately, there are many easy steps that you can take to increase your savings and increase your financial stability.
Perhaps the easiest way to start saving money is to put loose change into a jar. If you don't use cash to make purchases, there are a variety of smartphone apps and other tools that allow you to put your change in a digital jar. The reason why saving your change is so effective is because you tend not to notice the pennies, nickels and quarters laying around the house. Therefore, you won't feel tempted to use that money, which allows it to accrue over long periods of time.
Saving money is much easier when it is not earmarked to pay a bill or needed to pay for that upcoming family vacation. By increasing your income, you can simply put the extra money in the bank or into a brokerage account. Once you reach your savings goals, you can feel free to quit that job or use the money as part of a discretionary fund.
If you aren't happy with the rate of return that your bank's savings account offers, look for a new place to stash your cash. Online banks tend to offer the highest rate of return, and those with larger balances are often given the highest rates to obtain their money. In most cases, transferring your balance requires nothing more than a wire transfer or a similar form of electronic transfer between financial institutions.
There are a multitude of expenses that you could reduce or eliminate entirely after reviewing your budget. For instance, if you tend to take money out of an ATM, get the cash by using your debit card at a cash register instead. There are usually no fees to do so compared to the $3 or more an ATM usually charges.
You can also swap out your current cable television package in favor of a digital content provider. It may also be possible to buy a prepaid smartphone package to save money on your monthly phone bills. Buying your own phone as opposed to paying monthly can also be less expensive in the long run.
If you like to order dinner, you should go pick up the food instead of having it delivered as this can save $5 per order. There is also no need to tip your driver if you decide to get the food at the pizza place or fast food joint yourself.
A financial adviser may be able to talk more about how you can increase your savings by reducing your tax liability. For instance, contributing to an IRA or 401k may reduce your taxable income for the year, which can increase your tax refund. At the same time, the money that you put into the retirement account will grow tax-free until it is taken out later in life.
Your financial adviser could also suggest getting your home appraised in hopes of lowering its assessed value. Doing so could reduce the amount of property tax that you pay each year. Shopping online could reduce the amount of sales taxes that you pay when buying goods such as toilet paper or shoes.
Instead of spending $100 to buy a new set of tools, you could go to the auto parts store and rent them for an afternoon. It is also possible that you could borrow tools for free. The money that you save by renting in this instance could be put into a savings account or used to pay down other bills that you may have.
Let's say that you need children's books or babysitting services for the upcoming weekend. You could go to the store and purchase what you need or hire a babysitter to watch your kids. Alternatively, you could trade something that you aren't using in exchange for those books or trade your expertise in another area to get a babysitter for free.
Getting into the habit of saving money today can have positive consequences now and into the future. As well as increasing your own financial security, you can teach your children and grandchildren the habits that you have learned. This will make it easier for them to understand the value of a dollar and how to make it last for as long as possible.