Published in: Banks | Oct. 10, 2019
5 Easy Ways to Turbocharge Your Savings
By: Kailey Hagen
Saving more doesn't always have to require sacrifice.
What do vacations, emergencies, and big-ticket purchases have in common? They all require savings. We all know that, but a lot of people struggle to actually find the extra cash to put toward those goals. As a result, it takes them months or even years longer than it should to save up for the things on their want lists. And an unexpected emergency could derail these plans completely or send them spiraling into debt.
But it doesn't have to be this way. With a few small lifestyle changes, you can boost your savings without giving up anything that's important to you. Here are five ideas to get you started.
1. Cut spending on things you don't use
Most people associate cutting spending with making sacrifices, but this doesn't have to be the case. Oftentimes, if you actually look at where your money is going, you will find one or two places where you could easily cut back. This might be canceling a gym membership or cable subscription you aren't using or scaling back your cell phone data plan if you don't need as much as you thought you did.
Those truly motivated to save could also look into cutting back their discretionary purchases by cooking and brewing coffee at home instead of frequenting restaurants and coffee shops. Even if you just cut back by one meal and one cup of coffee per week, you're potentially saving yourself $20 per week, which comes out to an extra $80 in savings per month. Combine that with the other spending cuts mentioned above and you could easily save yourself an extra $100 per month this way.
2. Save your money in a high-yield savings account
Changing up where you keep your money could boost your savings without you having to set aside any more cash. The typical savings account APY is a mere 0.09%. High-yield savings accounts can offer APYs in excess of 2%, and this can help your balance grow more quickly.
Consider a single $10,000 deposit left untouched for five years. With the average 0.09% APY, the final balance would only be $10,045. But if you had a 2% APY, you'd have $11,041 after five years. That's almost a $1,000 difference and all it took was switching accounts and leaving the money alone.
3. Set up automatic deposits to your savings
Saving money is easier if you don't have to think about it. See if your bank enables you to set up automatic deposits from your checking account to your savings account. You could do this once per month, once per week, or once per pay period, depending on what your bank allows and what's most convenient for you. If you're not able to set up automatic deposits, set reminders for yourself so you remember to transfer the money on your own.
4. Start a side hustle
Side hustles are an increasingly popular way to supplement your earnings, and if you're serious about marketing yourself and growing your brand, it could eventually turn into a full-time job. There are side hustles that virtually anyone can do, like walking dogs or driving for a ridesharing company. But if you want to maximize your profits, think about the niche interests and talents you have. You could sell handmade items or perform household repairs for people in your neighborhood. The rarer your skills, the more you can charge for them.
Just don't forget about taxes. You must set aside a portion of your side hustle income because you aren't receiving a standard paycheck that Uncle Sam can deduct money from. If you had a side hustle the previous year, your tax return should tell you how much you must pay in to the government each quarter. Otherwise, you can estimate your side hustle taxes for the year by filling out this worksheet. Store your tax money in a separate account so you don't accidentally spend it.
5. Pay down your credit card debt
If you have credit card debt, your extra cash should go here each month after you've built up your emergency fund. Credit card debt is costly and you don't earn any rewards on the money you're paying in interest. Plus, once you get into credit card debt, it can take years to get out again, causing you a lot of stress and jeopardizing your ability to save for your financial goals.
One of the best ways to tackle credit card debt is through something called the debt avalanche method. Make the minimum payment on each card every month to avoid late payment fees and then put any extra cash you have onto the card with the highest APR until it's paid off. Do the same with the card that has the next highest APR, and so on until all your debt is paid off. You could also try transferring your balance to a card with a 0% introductory APR or taking out a personal loan to cover the costs. Once you're debt-free, you can take all that extra cash and put it toward your savings. You won't miss it because it's money you’re already used to giving away every month.
Carving out more money for saving in your budget may seem complicated, but it doesn't have to be. Try a couple of the strategies listed above and it won't be long before your bank balance begins to show the results of your efforts.
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