Thinking about building your savings may seem overwhelming, especially when you just paid for your car insurance, student loans and rent. Taking more money out of your paycheck, even if it’s to put into your savings account, can feel impossible. Chances are it isn’t and although there is no magic solution to increasing your savings, these tips will help steer you down the right path.
1. Make a Realistic Budget -- This may seem daunting and repetitive, but building your savings and staying consistent requires a clear plan. You don’t have to create a budget alone. There are a variety of budgeting apps that can help get you started (e.g. Mint, Wally ), but the most important thing to remember is make your budget realistic for your lifestyle — start small and work your way up. If your budget is too strict you will drive yourself crazy and you may give up on your plan altogether.
Try to divide your income into three categories:
- Bills and necessities: Figure out how much you are spending each month on bills and things you really need. This should include your phone bill, rent, student loans, car payment, food shopping, etc. Once you determine that number, put it aside.
- Savings: Establish how much money you would like to save each month. Again, start small and be realistic, even if that means saving only $50 each month. By putting $50 aside every month, you will add $600 to your savings by the end of the year.
- Just for fun: Just because you’re saving money, doesn’t mean you need to deprive yourself of entertainment. You can still go out with your friends for drinks or take a weekend trip with your spouse. Just plan for these expenses and spread them out over time.
2. The Change Jar Method -- Oh yes, dust off that old childhood piggy bank and put it to good use! The loose change in your pocket, on your car floor, and underneath your couch cushions can add up in the long run — especially if they are being stored in a jar and left untouched. We’ve heard plenty of stories from customers who created emergency funds, payed off debt, or booked a vacation simply by throwing all their loose change into a jar and never spending it.
Here’s a small trick to fill up that piggy bank quickly — pay cash for almost everything. Put away your debit/credit cards and start paying with green. That way, at the end of the day you will have a better chance of having loose change and $1 bills in your pocket to throw into your jar.
3. Cut Costs Around Your Home -- Think about it, how many things around your house could you part ways with without losing any sleep at night? Or how many little things could you do to cut down your monthly living expenses? For starters, cut that cable. Cable costs are ridiculously high these days, and in the world of streaming-devices, there is no need for it. Part ways with your cable provider and opt for a subscription service instead (Netflix, Hulu, Amazon Prime). Take what you save and put it right into your savings account for a $50-$70 monthly boost. Nice, right?
You can apply that approach to other things around the house. Get rid of your home phone and eliminate any unread magazine subscriptions. Lastly, be conscious about how much electricity you are using every day around the house. Turn off the lights when you don’t need them on, lower the heat or turn off the air conditioning when you are not home, and cut down on shower time. If you stay consistent with these small changes, you will start seeing a difference in your monthly electric bills.
4. Get a Side Gig -- Having a side job is an excellent way to accelerate your savings. Do you love to knit or have a knack for DIY projects? Consider creating a shop on Etsy and selling your pieces online. Are you a night owl and enjoy concerts or sporting events? Find a part-time gig working at a stadium at night or on the weekends. The possibilities are endless.
5. Set-up Automatic Transfer -- Out of sight, out of mind. Ask your bank how to set up an automatic transfer to your savings account. Allocate a certain percentage of each paycheck to be automatically placed into savings. This is one of the best ways to build your savings account.
6. Make Some Sacrifices -- If you are truly serious about building up your savings account, you’re going to have to make some sacrifices. This may mean less nights eating out with your spouse, putting an end to your monthly music-streaming subscription or canceling a meal kit service. At the end of the day, you lived without those things once upon a time and you survived. Plus, it will all be worth it once you start seeing that savings number climbing higher and higher.
Building up your savings is not something that happens overnight, but if you incorporate these six tips into your daily life they will steer you in the right direction. No matter how old you are or what your current financial situation is, it’s never too late to start building healthy spending habits and planning for a richer and more fulfilling future. We’re here to help! Lakeland Bank offers information on personal banking and financial planning on our website. Our Customer Service Team can be reached at 866-224-1379.