Published in: Banks | Feb. 21, 2019
5 Painless Ways to Boost Your Savings
By: Maurie Backman
If your savings are in a sorry state, here are a few easy ways to do better.
Image source: Getty Images.
Saving money means making sacrifices in some shape or form. After all, every dollar you put into the bank is a dollar you can't spend on a latte, rideshare, or whatever other treat you'd rather use it for.
On the other hand, savings are a must for every stage of life. You need emergency savings during your working years to cover unplanned expenses, and you need retirement savings to ensure that you're able to pay the bills during your golden years.
If your savings are sorely lacking, it's time to do a better job of socking money away. Here are a few easy steps you can take to boost your cash reserves.
1. Hide money from yourself
It’s hard to spend money you don’t know exists. One of the simplest ways to boost your savings is to set up an automatic transfer -- either to a bank account or a retirement plan. For the former, just decide how much cash you’re looking to add to your savings, and arrange to have it disappear from your paycheck before it hits your checking account. For the latter, you can sign up for your employer’s 401(k), and your contributions will be deducted automatically from your paychecks. Whether you’re saving for near-term needs or future ones, automating the process will reduce, if not eliminate, the temptation to spend, thereby helping you meet your goals.
2. Be tax-savvy
The less money the IRS takes from you each year, the more you’ll have left over to put in the bank. One easy tax break to maximize is the fact that traditional IRA or 401(k) contributions can be made with pre-tax earnings. By putting money into either plan, you’re saving in two ways -- by boosting your nest egg, but also, by sparing your contributions from taxes, thereby getting more cash to add to your bank account.
3. Bank your raises
Whether you’re looking at a paltry pay boost or a sizeable one, the beauty of getting a raise is that it’s extra money on top of what you were already earning. In other words, whatever raise you snag is money you’re not already counting on to pay your bills, so as long as you keep your living expenses at their current level and don’t take on higher ones, you should have no problem sticking the excess cash from your paychecks right in the bank.
4. Sock your tax refund away
Though filing taxes can be a tricky, trying process, the good news is that the overwhelming majority of working Americans get refunds year after year. If you’re one of them, that IRS check can do a great job of boosting your savings without requiring you to cut back on expenses or give up things you already enjoy.
5. Monetize a hobby
Side hustles are all the rage these days, and for good reason. With so many Americans lacking savings, working a second job is a guaranteed way to drum up extra cash. The problem, however, is that when you work full-time, the last thing you want to do with your spare time is more work.
The good news is that you don’t need to wait tables, field customer requests at a call center, or work a cash register to make more money. Instead, you can turn a hobby you enjoy into an additional income stream, and use your earnings to pad your savings account. If you love animals, become a dog-walker on the side. If you’re artistic, sell your creations at craft fairs or online. There’s a world of opportunity for you to make money by doing the things you’d be doing with your downtime anyway -- which is a far more appealing option than bagging groceries every weekend.
The Federal Reserve Board estimates that 40% of Americans don't have enough savings to cover a $400 emergency. Even if your savings are in better shape than that, it still pays to boost them as much as possible. You never know when an unplanned bill might fall in your lap, or what expenses might come your way in retirement, so the more cash you’re able to put away, the more financial security you’ll buy yourself.
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