Whether it's the new year or not, one thing financial advisors, friends and family always seem to be saying is "save more money." Even a small boost in your savings rate, such as 1 percent per year, can have a big effect on the amount of money you end up with. As the Chicago Tribune reported, increasing your savings rate by 1 percent per year for 12 years means an extra $1,930 a month by the time you retire.
You know that you need to --and want to--increase your savings. You're just not sure where to start. The good news is that you can boost your savings rate and find more money to set aside just by making a few small adjustments to your life. Here are a few ways to almost effortlessly increase your savings.
A penny here, a penny there. It might not seem like much, but it adds up. Instead of losing loose coins in the couch or letting them languish in the bottom of your bag or purse, gather up all your loose change at the end of the day and put them into a jar. Once the jar gets full, take it to a coin counting machine and deposit the amount into a savings account. According to America Saves, if your goal is to create an emergency fund of $500, stashing away 50 cents per day into a coin jar will get you almost 40 percent of the way there in just a year.
Save Instead of Spend for One Non-Essential Item
Perhaps you've heard of the latte factor, the idea that if you stopped buying coffee out, you could save thousands per year, and end up with thousands more in retirement. If the idea of skipping your daily coffee fills you with dread, even just cutting one or two coffees (or other non-essentials, such as a weekly manicure, happy hour drinks or take-out lunch) per week can make a difference. Tuck the money that you would have spent on your coffee or other non-essential into a savings account and watch it add up.
Transfer Money to Savings First
If you constantly feel like you run out of money before you can put anything in savings, it can help to flip the script. Instead of waiting until the end of the month to put your money in savings, do it first thing. It's easy to set up an automatic transfer so that your monthly savings goes directly into your savings account from checking after you get paid.
To help you figure out how much you can comfortably afford to save, it helps to have a budget. Tally up your income and your expenses for each month, then look at the difference. Ideally, you'll have money available to commit to saving. If not, take a look at what you are spending your money on each month and find where you can cut back, so that you have at least a little cash to save.
Take a Day
Sometimes, impulsive purchases can really derail your savings. If you often find yourself buying things you don't need or don't even really want, create a time rule. Decide to wait at least a day or even a week between the time you see something that seems like a "must have" and the time you purchase it. Odds are, after a day or so, the desire to buy the item will fade and you'll be able to keep your money in your savings account or wallet.
Set a Goal
Saving money can be tricky if you're not sure why you're saving it. Instead of aimlessly putting money in an account, give it a goal. It can be to save $500 or $1,000 for emergencies, to set aside three to six months worth of income just in case you lose your job or get a pay cut, or to increase your retirement savings by $XX amount each year. Knowing why you're saving will help you make more of a commitment to actually save your money.
Are you ready to make small changes and boost your savings rate? Contact Coosa Valley Credit Union and learn more about our savings accounts and retirement options today!