Savings accounts are common personal financial accounts that pay you a little return on your deposits. People open these accounts for a wide variety of reasons, but for some folks, saving money seems close to impossible.
Luckily, saving isn’t nearly as hard as you might think. Here are several tips to help you find “extra” money that you can deposit into a savings account, so you can watch your savings grow.
Determine where you spend your money
In order to save money, you have got to spend less. But before you can reduce your spending, you must know where your money is going every month.
Gather together all of your receipts, bills and bank statements from the past three months. Write down all of your necessary expenses such as rent or mortgage, car payment, insurance payments, utilities, groceries and fuel.
Now make a list of all of your luxury expenses including eating out at restaurants, buying beverages at the coffee shop and any entertainment expenses.
You must now decide which of your luxury expenses you can live without. Do you really need to eat your lunch out every day? Brown bagging it will save you a bundle.
What about your morning cup of coffee from Starbucks? Try making your coffee at home and take it to work in an eco-friendly travel mug. You’ll not only help the environment, but you can also save at least $100 a month. That is “extra” money you can deposit into your account.
Find extra ways to save every day
Get two envelopes and label one, ‘Gas’ and the other one, ‘Groceries’. Figure out your average monthly expense for each category, withdraw that amount of cash and place the proper amount in the appropriate envelope. Pay for your gas and groceries using just the cash out of the envelopes.
Reduce the amount you spend at the gas pump and walk or combine errands whenever possible. Some employers provide their workers with public transportation passes, so take advantage of that perk if you can.
Shop for the weekly grocery sales and clip those coupons. Try to combine store sales and coupons when possible to increase your savings. If you are lucky enough to live near a store that offers double or triple coupon days, make sure you shop at the right time to reap the rewards.
When the month is over, take the remaining cash out of the envelopes and put it into your bank account. Make frugality a game and you will watch your savings grow quickly without feeling any pain.
Make saving automatic
A good rule of thumb is to pay yourself first and then forget all about it. The easiest way to do this is to have your employer deposit a portion of your wages directly into your account. That way you’ll never even see the money. Out of sight, out of mind.
If this isn’t possible, arrange for your bank to automatically transfer funds from your checking account into your savings just after you receive your regular paycheck. The trick is to leave that transferred money alone.
Don’t withdraw money
Remember that savings accounts are not the same as checking accounts. If you make a lot of transactions, you are only reducing the amount of money that is generating interest. Only take money out of your savings account in true emergencies.