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MONEY
2020 TM
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Saving More Of What You Earn
So you've set a financial goal to increase the amount of money you have in savings! That's great, an important first step. Now, where is that money going to come from? Setting aside more of what you earn for savings can be a challenge. Here are a dozen tried and tested ways to increase your savings to get you started.
A Dozen Ways to Save More of Your Paycheck
- Pay yourself first! The best idea is to decide to save a certain percent of your take home pay, and set those funds aside before paying any other expenses. Most financial planners encourage individuals to save at least 10% of their income. If you have not been in the habit of saving
that much, start with 2% or 5% and then adjust upward as you are able. Many people find that they really notice no difference in their lifestyle when they start such a plan.
- Collect coins in a jar. Just saving the 25 cents change from a 75 cent cup of coffee will result in a yearly savings of $65.
- Bank your refunds. Instead of spending your income tax refund, use it to pay down a high interest credit card bill or directly deposit it in the highest interest saving option you can find.
- Continue paying a loan. When you finish paying off a car loan, for example, continue making that same monthly installment payment, but to yourself! Put that dollar amount into an investment that will earn the highest possible rate of interest.
- Break costly habits. Coffee, a doughnut and the newspaper purchased every working day might cost you $15 or more per week - or - $750 per year.
- Increase investment yields. Look for higher interest opportunities for your savings. Don't leave them languishing in a basic bank or credit union savings account with minimum interest earnings.
- Buy U.S. Savings Bonds. This is an ideal way to set aside small amounts of money for long term goals. EE savings bonds can be purchased at banks and through employer payroll deduction plans. They are purchased at one-half their face value (eg. $25 for a $50 bond) and come in denominations of $50, $75, $100, $200. $500, $1,000.
- Take advantage of payroll deduction plans. This is the easiest way to pay yourself first. If you never have the money in your hands or your checking account, it is much less tempting to spend it.
- Join Christmas and vacation clubs. Banks pay little or no interest on 'club' accounts and most stopped giving gifts years ago. The major advantage is reinforcement of systematic savings with weekly coupon books and the ability to save small amounts.
- Bank a windfall. When you receive an unexpected amount of money, the temptation might be to spend it on something extra as a treat. Another way to think about it is as an investment in your future. It's money you won't miss, because you were not expecting it, or did not have it as a part of
your regular monthly spending plan, so it could easily be used to increase your net worth.
- "Crash Savings" - This means deciding to do without any extras for a determined amount of time. All money that would normally have been spent on those items is put into savings. The idea is that it is easy to do without some things for a "Nothing Week" or a "Nothing Month".
- Set Goals - A recent study, sponsored by the consumer Federation of America found that people who develop plans to reach savings goals have approximately twice the amount saved as those without plans.
