Have you accumulated debt? Do you owe on loans? Would you like to put back money for the future? Have you acquired an interest in creating an emergency savings? If you answered “yes” to any of these questions, this guide is for you. In this article, we will share some strategies with you that will help you save money this year. Continue reading to learn more.
The Main Objectives
When saving money, the main objectives include knowing where the money that you have is going, to set goals that are clear and may be realistically accomplished, and to automate the entire process of saving. Actionable steps are imperative. The following outline some basic steps to help in getting started with your money saving endeavor:
- Track Spending – To start with, you will want to record every single expense that you have. It does not matter if it is something small like a coffee purchase or something larger like a smart television. You may use a spreadsheet, go simple and use a notebook, or go digital and use an app. The goal is to see where your money goes each month and help you to identify areas that you may cut back on spending.
- Budget Creation – The next step is to create a budget. This is a specially-designed spending plan that aids in the allocation of your income towards both your spendings and your savings. In most instances, financial advisors recommend what is called the “50/30/20 Rule”, that is, spend a total of 50% of the take home pay that you have on your needs, spend only 30% on your wants, and then focus on savings and the repayment of your debts with the last 20%.
- Set Specific Goals – If you have a desire to save money, you should have a specific goal or even several specific goals. You may want to create an emergency fund that includes up to 6 months of earnings so if something happens to your main earnings, you can have an account to fall back on. Another goal may be to save up for a down payment on a home or save up for a down payment on a vehicle. Another goal includes planning for your retirement.
- Pay off Debt with High Interest Rates – When you want to make the most of your money, it is important that you pay off any debt that you have that carries a high interest rate. Examples include credit card balances. The money that is saved can then be directed to your savings account – where it can earn interest.
- Pay Yourself First – You should have both a checking account and a savings account. Set up an automatic transfer from the checking account to the savings that you have each payday. This will allow you to invest the money into your savings rather than in your checking account where you can easily spend it.
- Acquire a High Yield Savings Account – The next step to meeting your financial objectives is to open up a high-yield savings account. These types of accounts earn a higher interest rate than the traditional savings accounts that are available for consumers. Because of the higher interest paid on the balance, your money will grow quickly.
- Separate the Bank Accounts – Many financial advisors recommend keeping your checking account and your savings account at two different banks. The reason being is that you will be less tempted to take money from your savings account to make purchases on impulse.
- Windfalls Should Be Saved – If you have unexpected windfalls – such as a bonus from work, gift money, or an unexpected tax refund, you should save them by placing them in your savings account. It is not like you will miss the money because you weren’t expecting it to begin with.
How to Reduce Spending
There are several unique strategies that you may indulge in that will aid in the reduction of spending. The following outlines these ideas:
- The 30-Day Rule – If you want to buy something that is considered to be “non-essential”, you should wait 30 days before officially making the purchase. This will ensure that you are not impulse buying. Additionally, it gives you the opportunity to think more about the purchase. If you do not want to do the 30-Day Rule, you could make it any time frame that you want – 24 hours, 72 hours, two weeks – the choice is yours. Just make sure that once you make the choice that you stick to it.
- Shopping Lists – When the time comes to buy groceries and other household staples, it is important that you make it a habit to create a shopping list. When creating the list, be sure to see if you can obtain any coupons for what you need, and/or look up any loyalty program benefits. Go through the pantry, fridge, and the freezer and only put items that you truly need on the shopping list. Once you get to the store, be sure to stick to the list and do not indulge in any impulse purchases.
- Eliminate Subscriptions – In this day and age, it is quite likely that you have at least one monthly streaming or gaming subscription. Look at your bank statement and see if you are being charged for memberships and other charges that you no longer want. If the answer is “yes”, you may cancel those subscriptions and/or services. If you have phone and internet bills, it is possible to call and negotiate a lower rate on your services.
- Cook at Home – As simple as it is to run out to grab a bite to eat, it may prove to be extremely costly. If you want to save money, prepare and cook the food that you eat at home. This includes your lunches that you take to work. While there are many delivery services that make eating out a simple option, those, too, come with fees.
- Cut Down on Energy Costs – Energy costs are often among the highest of expenses for people. You should unplug items when not in use to prevent the accumulation of phantom power. You should use thermostats, update your home’s insulation, lower the temperature on your water heater, reduce the amount of laundry that you do each week and pay attention to other activities that could have a detrimental impact on the amount of money that you may for energy. You may even consider the integration and usage of solar panels.
- Use Retirement Accounts That Offer Benefits – You should make use of retirement accounts offered by your employer. Typically, these come with tac advantages and they may even include matching funds. If you allocate part of your income, you will not miss the money too much. The sooner that you start taking advantage of this type of account, the sooner you can take advantage of compound interest on the account. If your job does not offer these types of accounts, you should set up an Individual Retirement Account. You may do this with a financial institution. Just remember to make regular transfers into it so you reap the highest level of rewards.
- The 52-Week Reward – This particular award is often referred to as the “Savings Challenge”. Basically, with each week in the year, you put that mount of money into your savings account to accumulate interest. For example, the first week of the year, you would put in $1.00, the second week, $2.00 and so on and so forth until you put in $52 on week 52.
How Many Americans Have at Least $100,000 in savings?
According to studies, up to 26% of all Americans have at least $100,000 or more saved. Many households have achieved this goal, especially those that include older people. Young adults account for only about 2.1%.
Contact Us Today
If you are interested in saving money, we here at Somerville Bank are standing by to assist you. We offer a wide range of unique services and plans across several locations – for your convenience. You will find that we offer services and features for both consumers and for businesses. We also offer credit cards, identity theft services, online banking, Zelle, and more!
Our bank was officially established in the year of 1910 in the Southwestern region of the State of Ohio. All the way to the year of 1989, our establishment was the smallest of nationally chartered banks in the United States. It has now grown to a total of seven full-service branch banks. April 2010 celebrated its 100th anniversary!
We were once called Somerville National Bank; however, we recently changed to Somerville Bank. We pride ourselves in having over 30 + years of banking experience. All of our current management team has been with us for 20+ years. If you would like to learn more about savings or products that will render you successful in your savings goals, contact us at one of our branches today: https://somervillebank.net/locations/
Somerville Bank has 8 Locations