Living paycheck to paycheck is a grim reality for many Americans. One recent report revealed that fewer than 40 percent of people have less than $1,000 in their savings accounts and that many have no retirement savings at all. This may sound familiar to you but it could be your worry that building your savings requires high-risk investments, and this could leave you bankrupt. Fortunately, there are a few strategies you can use to pad your savings account without having to navigate the stock market or make other risky investment moves.
1. Review and Revise Your Budget
Being realistic about your household budget can help you make great strides in building savings. If it has been more than six months since you last reviewed your budget, sit down with your spouse or partner and take a hard look at how you spend. Seeing your habits on paper may help you realize where you might be wasting cash and where you can make significant changes.
It can be daunting to make serious cuts to your budget, but if you want to grow your savings quickly, then sacrifices must be made elsewhere. This is not to say that you need to cut out entertainment or creature comforts completely, but it is wise to consider which services might be wasteful, such as magazine subscriptions or costly gym memberships. Read free articles online at your favorite magazine’s website and make plans to work out at home.
2. Set Small Goals at the Outset
While planning savings goals can keep you motivated, setting too large of a marker may frustrate you and cause you to toss your savings plans completely, especially once you first start out. Learning how to save can be a difficult process, so setting smaller, more attainable goals when you first open a savings account may be more fruitful in the long run.
For example, if you want to ultimately save $1,000, set a goal of $250, which is one-quarter of that amount. Once you reach that goal, up the mark to half, or $500, and so on. Raising your goal by these increments can help you see your progress in a positive light, and you will likely feel proud when you reach each milestone.
3. Use Credit Cards With Cashback Rewards
You might view using credit cards as being almost as financially daunting as some investment risks, but not all credit cards are bad news. In fact, some can help you pad your savings if you use them correctly. If you are currently searching for a card that suits your lifestyle and budget, consider applying for one that offers a cashback bonus instead of travel points or other perks.
A cashback reward can be useful in several ways. For example, many credit card companies that offer them allow you to put those rewards toward your monthly payment, which can raise what you pay toward your premium without having to pull money from your savings. Second, these rewards build from items you buy each month, such as groceries, fuel, and other necessities. It is important to remember, however, that a cashback credit card is only useful if you use it wisely and do not overspend.
4. Pick Up a Side Hustle
Technology has made finding a viable side hustle simpler than ever. From being an Uber driver to web design or content creation, picking up side work by using your natural talents can help your savings grow significantly. If you are not sure which job would be the best use of your time and effort, focusing on what you enjoy may be a good place to start.
While you might hesitate about turning a hobby you enjoy into a job, there are several advantages to this tactic. For example, if you enjoy creating digital art, consider adding a commissions list to your social media bio so you can take orders as they come and set a time frame that allows you to enjoy the artistic process while you make a profit at the same time.
5. Change Your Meal Plan
Revising your meal plan and how you grocery shop can help you understand where you might be wasting both money and food when you could be putting these resources toward your savings and dining table. Even if you use a shopping list, it may not be as effective as you think if you are not planning weekly meals.
Before you grocery shop, consider how much food you throw away each week when you clean out your fridge. Make a list of items that are wasted most often and strive to buy these less often. Consider cutting back on how often you eat out and make weekly meal plans so you can have the ingredients on hand. If you are pressed for time during the evening, cook and freeze meals over the weekend so you can defrost items when you get home from work.
6. Consolidate Your Bills
If you are struggling with loan payments, high-interest credit card bills, and other monthly debt that prevents you from saving money, you may want to consider consolidation. From companies that operate in the U.S. to those available for individuals and families living in Sweden, there are many to choose from.
You might think that consolidation is only an option for those who are facing bankruptcy or some other type of serious financial issue. However, this process is typically available for anyone who wants to reduce their monthly loan payments and opt to pay a consolidation company one lump sum instead. Depending on the company you chose and where you live, the interest for each payment and the total may be lower than what you are currently paying each individual creditor. Consolidation companies in Norway, for example, offer such manageable options.
7. Lower Your Energy Bills
Savings can be found around your home if you know where to look, and you can start with your energy resources. Old windows and doors allow heat and cooled air to escape, which wastes resources and may raise your utility bills. Consider investing in energy-efficient options instead. Contact a local roofing contractor to inquire about utilizing solar power and take steps to conserve water. When you lower these bills, the money left over can be applied toward your savings.
If you are uncertain about where you might be losing valuable energy resources around your home, you can ask your local power company to conduct an audit. During this process, a qualified energy professional will come to your property and evaluate how your home uses energy and where waste might be taking place. The auditor might suggest having your hot water tank cleaned of sediment, your ducts cleaned, and which rooms might benefit from new windows and doors.
8. Make Willing Financial Sacrifices
Your savings cannot grow unless you make a conscious effort to contribute to them each pay period. This will probably require several sacrifices on your part, but you might find skipping that expensive latte or saying no to a new outfit is well worth it as you watch your savings increase. Remember, you do not have to deny yourself all the time and live on the bare minimum when it comes to growing your savings, but making financial sacrifices a few times a month can go a long way.
Building your savings account without making risky investment choices can be a challenge. However, when you take steps to revise your budget and spend more wisely, you might see your nest egg grow by leaps and bounds.