Saving… An ever relevant and foundational element of personal finance. It doesn’t need to be boring! It shouldn’t be a word that you look at with dread.
Saving is cool
It means you are financially building toward something.
It is the basis upon which your life and future wealth is built on.
You probably work hard for your money so shouldn’t you see some it accumulating in one of your bank accounts rather than needlessly leaking out to unknown and irrelevant places??!
We’ve put together 5 steps to get you closer to a savings nirvana:
ONE: Open a high interest savings account (or check in to make sure the one you’ve got still meets your needs).
There is no use having a lot of money sitting in your normal bank account. The interest rate there is generally much lower than high interest ones. Use the standard one as your transaction account (where income comes in) and open a high interest one to transfer the amounts you want to save into. These generally don’t have any fees and you can open several under different account names (ie house deposit, holiday). Check out the account comparisons on Mozo.
TWO: Set up an automatic savings plan.
Once you’ve set up your high interest savings account, set up an automatic savings plan. I normally set it to transfer money from my transaction account to my various high interest accounts the day after my pay arrives. I consider it paying myself first. And it is great to set it and forget it and just allow the savings to take place
THREE: Understand your needs versus your wants and track your spending for a month to see where it is going.
Very often we mindlessly spend small amounts that add up – $2 here, $5 there. Pay attention by writing down (or entering into an app such as ixpenseit) It brings awareness to what you spend on (a funny side effect I found was that I spent less because I didn’t want to write it down!)
Understand your own needs and wants and see if the item you’re looking at is necessary for you right now. If it is, implement the one in one out strategy to help keep your life less cluttered. For example, if you’re purchasing a new book, is there one you currently have that you could give away? Or if it is a new pair of shoes, is there an old pair you could donate?
FOUR: Reassess your bills, accounts and recurring payments and save the difference.
Have a look at things like your phone company, insurance, gas and electrical, gym memberships and credit cards. Could you renegotiate or research better deals? If so, put aside a couple of hours and make a few phone calls (or write some emails). When you save some dollars (and I’m sure you will) deposit what you would have saved into one of your high interest savings accounts. Cool!
FIVE: Get a piggy bank.
Seriously. It is a wonderful tangible way to stockpile those coins or notes you find in back pockets or jackets you haven’t worn in a while (don’t you love that?!). You don’t need to have a pretty piggy bank, you could use a shoebox or a jar, but if you’re in the market for one check these out (going to a good cause).
So there it is, 5 Ways to Step Up Your Savings. It’s not that hard – so what are you waiting for?!
For previous 10thousandgirl articles and podcasts on savings check out our http://www.10thousandgirl.com/tag/saving/