Whether you’re hoping to build better financial habits, grow your emergency fund, or spend wisely during stressful times, sticking to a tight budget can be difficult to do. In uncertain circumstances, it can become even more challenging to set funds aside.
No matter your goal or the situation you’re in, one of the smartest ways to save is by making smart, consistent choices each day. Not sure where to start or looking for new ideas? Here are five tips to consider as you work toward saving more money each month.
1. Automate where you can
Making automatic payments to settle your monthly bills can help you avoid missing a payment, which may result in late fees. Regular, on-time payments will also help increase your credit score. Rather than paying separately on different websites, opt to automate the process through your bank to organize and see all of your upcoming and past payments in one place.
If you earn a steady paycheck, opting to auto-deposit it directly into your account can help you grow your savings. At One, for example, we offer competitive interest rates and an auto-savings function that works like a 401k. It redirects a small amount from each direct deposit paycheck into an Auto-Save pocket that provides an even higher return. You’ll earn 1% APY on balances in your Save pockets, plus 3% APY on any balance in Auto-Save pockets.
2. Pay down high-interest debt
If you’re taking a blended approach to increase your savings while paying down existing debt, it’s important to remember that having high-interest debt, like credit cards, can cost you over time. Do you know how much you’re paying in interest each month on your outstanding cards? As of April 2020, the annual percentage rate on credit cards was 20.77%. While you may be focused on growing your savings, paying off high-interest balances as quickly as possible will help free up more money to put into your savings account.
In the case of lower-interest debt, such as student loans, it may make more sense to put any extra money into your savings account or emergency fund. Once you’ve reached a milestone you’re comfortable with, you can refocus on paying down these debts.
3. Make time for regular financial check-ins
Checking in on your finances regularly will create a sense of security, and you’ll gain a better understanding of where you can save more money. During your check-ins, take stock of each current account and rates, make note of any changes to your usual spending, and verify the accuracy of each transaction.
Conducting regular financial check-ins will also make it easier to spot timely opportunities to cut back on bigger expenses. Can you refinance and lower your car payment? Does it make more sense to get a roommate to help subsidize your mortgage? Being aware of all possible options can help you reduce costs to free up additional funds in your budget.
4. Remember your “why” and celebrate wins
Why would you like to save money? Is it for an emergency fund, to pay off student loans, or to pay for your kids’ education? Having a clear reason for saving money — whether on your own or with someone else — will help you stay motivated, even while on a tight budget. Set specific goals, name them, and celebrate your victories and proud money moments along the way.
If you’re using One to save and share money with another person, rename your pocket to reflect a goal. You’ll be reminded of your shared goal and “why” each time you see it.
5. Simplify your system for a clearer financial picture
Did you know that the average American family has 10 accounts with at least five different financial institutions? It can be difficult to keep track of your money, understand where you stand, and set aside funds when you’re managing multiple accounts. Even more, these accounts often come with high costs and fees for overdrafts, non-sufficient funds, cash advances, and maintaining account minimums. Not to mention, you’re likely paying high interest on any outstanding balances — while receiving low interest on credit balances.
Streamlining your accounts, on the other hand, can give you a clearer snapshot of where you stand. Look for a bank or financial institution that makes it easy for you to manage all of your money within one digital dashboard. Not only will this save you time and stress, but it will make completing your financial check-ins and saving money much easier too.