These Powerful Steps Make Saving Money even more Rewarding
Have you taken action to make saving money a priority? If you are like the average person, you maybe save around 5 percent of your total income. Bumping that figure up just a little bit, though, can help you to make great strides in reaching your longer-term money-saving goals. According to recent studies, 5.5 percent is the figure that represents the saving efforts of most Americans as of the last quarter of 2015. Other studies have shown that people who do manage to save even a little bit of money drastically underestimate the value of saving a small amount, like an extra $50 over a 25 year stretch. This money could grow to about $40,000 because of compound interest and the potential for market growth.
Let’s slow things down here and avoid getting too far into the most recent studies. What you want is to know some powerful tips that can motivate you to start saving money, or if you already are, to start saving even more.
Cut Back on Little Expenses and add the Money Saved to your Savings Account.
Let’s say you are doing average with your savings and putting away about 5 percent each year. Imagine how you can add to your savings account by simply cutting back on some everyday expenses. Consider these little tweaks that you can make to your household spending:
- Use more coupons or discounts when making purchases.
- Sign up for employee perks programs to save money on expenses.
- Instead of taking an expensive vacation each year, explore locally and do a more affordable “staycation.”
- Turn off lights and other appliances not being used to lower energy costs.
The key is to make these little things new habits. Then, compare your monthly savings by following them and add the money you managed to trim from expenses to your savings account, and continue doing so in the future.
Long Term Savings Accounts Other than Retirement Accounts
You likely have a retirement savings plan with your employer or that you set up with a financial planner. It’s great to save for retirement, but what about other longer term goals that you might want to save money for? You should look into setting up a Certificate of Deposit (CD) or money market account to act as a place holder for this money. You may be thinking about buying a new home in ten years. You don’t want to put the money you save for a down payment in your retirement account, or you’ll pay penalties to withdraw it. And you certainly can’t just leave that money lying around. Open a separate account and earmark those funds specifically for your long term savings goal. Keeping the money “separate, but saved” will allow you to earn a little interest, while staying laser focused on your non-retirement long term savings goals.
Add Another 1 Percent
Think about the power of simply upping your current savings amount by 1 percent a year. Most people earn more money as they get older, and they get pay raises. Don’t simply start spending the extra money, save it. Live within your means, don’t run up any new debts and simply up your savings efforts by 1 percent each year. If you get just a 2 percent “cost of living” increase at work each year, you can play with 1 percent, save 1 percent and watch your money grow like a weed over the long term.
Use these little tips to help make saving money more fun. When you actually enjoy saving money, and see the fruits of your efforts, you may even decide to ramp up your efforts with other powerful methods to create more wealth for you and your family.