Are you looking for a way to make your savings grow faster right now? Here are ten things you can do to get started.
10. Cut Back on Spending
This is obvious, but it’s not as easy as it may sound. “If you’re going to be a saver, it’s going to require some tough decisions,” Greg McBride, chief financial analyst at Bankrate.com, said in a CNBC article. “It means passing up consumption today so that you can instead save for consumption in the future.”
To cut back on spending, you can start by cutting back on unnecessary expenses. While it may be fun to get your nails done or go out to eat every week at your favorite restaurant, those activities can severely cut into your savings. We’re not saying you have to eliminate those types of activities altogether, but the more you do, the more money you’ll be able to set aside.
9. Switch to an Online Savings Account
Traditional savings accounts are loaded with hidden costs. From minimum balance fees to annual fees to withdrawal penalties, the charges can quickly add up–and your savings can quickly dwindle. Thanks to low overhead costs, online banks are able to offer savings accounts with lots of perks, like no minimum balance fees, no withdrawal penalties, no monthly maintenance fees, and higher interest rates. Plus, some of them even let you open an account with no deposit.
TIP: Look for a bank that compounds interest daily. With compound interest, you earn interest on your principal AND your interest.
8. Join a Credit Union
If you’re a little leery about putting your money into an online bank, consider joining a credit union. Credit unions typically have higher interest rates compared to those offered by traditional banks. They also tend to have lower fees. That’s because, unlike commercial banks, which are for-profit institutions, credit unions are not-for-profit entities. They exist to serve their members, which includes paying them dividends.
Other advantages of credit unions:
-Superb customer service
-Their services benefit the local community
7. Set Windfall Profits Aside
Did you just get an unexpected bonus from work? Did you win the lottery? Could you possibly be getting a sizable income tax refund next year? Resist the temptation to spend it, and put it in a savings account instead. This can include a retirement account. You can use the extra cash you’ve gotten to increase contributions to your retirement plan. Your future self will thank you for it.
-If your windfall involves a payout option, you’ll likely get the most out of your money if you set up annual payments instead of settling for a lump sum.
-If your windfall is considered income (e.g. lottery winnings, work bonuses, etc.), talk to a tax adviser to find out how your taxes will be affected.
6. Choose a CD Account
If you do, you’ll enjoy higher interest rates compared to standard savings accounts. For example, a $6,000 CD, or certificate of deposit, that earns 2.4% APY for a one-year term will earn you about $145. Beware, however. Access to your funds will be restricted during the CD term, which is usually anywhere from three months to five years. Just make sure BEFORE you invest in a CD that you won’t need to touch that money right away. If you do, you’ll likely end up paying a penalty. Depending on the bank’s policy, you might even have to forfeit a portion of the interest earned.
5. Automate Your Savings
Set up recurring transfers to have money from your checking account automatically moved into a savings account. “Paying yourself first clears the biggest hurdle for saving, which is simply not being in the habit of saving. It takes care of saving money before you have a chance to spend it,” McBride said in an article on Bankrate.com.
TIP: You can always start off small and work your way up to a higher deposit amount once you are able to set more money aside.
4. Don’t Touch Your Savings
We know that extra money is burning a hole in your pocket, but if you want to grow your savings, you absolutely must resist the temptation to transfer that money into your checking account. If you know you’re likely to struggle with that, the MoneyLion app has a feature that just might help you out. Here’s how it works: “Grow Your Stack” is an augmented reality feature that lets you visualize your account balance as stacks of cash. “The reason we designed it is to give our users an even clearer starting point for their financial goals, i.e. your financial reality today, so that we can work together to get you where you want to go, and watch your stack grow as you progress,” MoneyLion said on its blog. And, according to Bankrate, if you can see your money growing, you’ll be less tempted to spend it.
3. Switch to a Cash-Back Credit Card
The last thing you want to do when trying to save money is spend money–especially with a credit card. But, if you already own/use them, why not switch to one that gives you cash back on your purchases? You can put that extra money into a savings account.
Depending on the card you get, you could earn as much as 5% cash back on everyday purchases like gas and groceries. If you get the Wells Fargo Cash Wise Visa Card, you’ll earn a $200 cash rewards bonus after spending $1,000 in the first 3 months, unlimited 1.5% cash rewards on purchases, and 1.8% cash rewards on qualified mobile wallet purchases (e.g. Apple Pay, Google Pay, etc.) within the first year of opening the account.
2. Decide to Work Longer
No, we’re not talking about longer work days. We’re talking about retiring later. Staying on the job can add to your 401(k) contributions. According to Reuters, financial adviser Leon LaBrecque, who is based in Troy, Michigan, had a 64-year-old client who found out that staying on his job until full retirement age (66 years old) would result in adding two years of $24,000 contributions to his 401(k). Plus, if he keeps working until he’s 70 years old, he’ll get the maximum Social Security benefit. That’s because each year you delay retirement, your Social Security benefits increase by about 7 to 8 percent. And, that equals even more money in your retirement savings.
1. Consider Opening an Interest-Bearing Checking Account
It’s not quite a savings account, but you’ll be able to earn interest on your balance. For example, with a daily balance of $2,500 at 0.20% APY you’ll earn $5.00 within a 12-month period. A mere drop in the bucket, but hey, it’s $5.00 more than you started with at the beginning of the year. And, that extra $5.00 could go into a savings account.
TIP: To get the most out of your money, open an interest-bearing checking account with an online-only bank like Ally. You won’t have to worry about monthly maintenance fees or being charged by Ally for any ATM fees, and they’ll reimburse you for ATM fees charged by other banks.
Following the tips in this article might not make you rich, at least not right away, but it can help you reach your financial goals in the short- and long-term. Thanks for reading, and best wishes on growing your savings!