Thursday, July 22, 2010

10 Ways to Increase your Savings

With a record number of taxpayers living paycheck to paycheck, these days many people are finding it difficult to save money. We all work hard for the income we earn and it is nice to be able to put a little away for the rainy day – so, I have put together the following list of saving tips.

1. Set a Savings Goal

If you are serious about saving money, then I highly recommend the following: set a goal, a timeline, and a plan of attack. Depending on your unique financial situation your goal might be to save up enough money for a new car, or it might be to just put extra funds in your savings for that rainy day. Whatever your goal is, it is always helpful to identify it, and work towards achieving that goal.

2. Focus on Paying Off Debts

Many of us have credit cards, and are simply paying the minimum monthly payment. Do you believe sending monthly payments to a creditor can significantly inhibit your ability to save? Believe me, it does. Therefore, you should focus on paying off your credit cards as soon as possible. It is always a good rule of thumb to begin paying down cards with the highest interest rates, which will help you save as much of your money as possible. As you work towards paying these cards off, it is important to not use them any more then you absolutely have to. A good habit to get into is to pay the monthly balance in its entirety each month.

3. Put Together a List of Monthly Expenses

In order to assess areas that you can save, you should put together a list of all of your monthly expenses. Then, determine which expenses are required (rent, car payment, health insurance, etc.) versus those that are unnecessary (such as coffee, landscaping, gym memberships, etc.) By making these two separate lists you can focus on finding ways to save.

4. Trim "Unnecessary" Expenses

After your list is complete, you should identify all the ways you can trim your unnecessary expenses. This could include eating out less, brewing your own coffee, mowing your own lawn, downgrading your cable or satellite service, or finding a gym with a less expensive membership fee. It might be difficult to go without some of these luxuries at first, but once you begin seeing the result of your savings you will be encouraged to trim more and more!

5. Reduce Household Monthly Expenses

Even though you cannot simply get rid of some monthly household expenses, you may be surprised to see how much money you can save with a little effort. When your lease is up ask your landlord to reduce the rent, or move to a cheaper place. If you own your home you might be able to refinance with a lower interest rate. Additionally, you should check your insurance policies to make sure you are not “over insured,” and paying an inflated premium. You could even start an office carpool to lower your gasoline bill. Be creative; you are sure to find a few ways to reduce your monthly expenses across the board.

6. Stick to your Budget

Millions of families across the country make a monthly budget for expenses, but sticking to that budget is often easier said then done. You should make your budget a priority, and get your whole family involved in the process. Maybe invest time in having a weekly or monthly family budge meeting.

7. Become a Discount Traveler

Summer is often the season when families take a vacation. However, your vacation does not have to break the bank. You could save money by looking for cheaper hotel rooms online, or take a frugal camping trip this year.

8. Review Tax Withholdings

While looking for ways to cut your expenses, it is also a good idea to look over the taxes being withheld from your paycheck to make sure you are not over or underpaying. If you overpay the government each month then you are basically giving the IRS an interest free loan. Instead, you could get more money in your paycheck, and put that money into a savings account.

9. Interest Earning Savings Account

As part of your plan to save money, you should consider looking around to find a savings account with the best interest rate possible. If you have enough spare cash you might be able to put the money into a high interest savings account. However, these accounts often have restrictions such as a large minimum balance.

10. Put Money from Each Paycheck into Savings

If you are committed to saving, then you need to make it a priority and see that money from each of your paychecks goes into your savings account. You could decide to put a specific percent of your income into savings, or a dollar amount, whatever you select the most important thing is to stick to your plan. Many banks even offer automatic transfers from your checking to savings account, which is a great way to make sure you add more funds to your savings each month.

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