Many of us have the goal of saving money, whether for retirement, as a cushion for emergencies or simply for travel and other luxuries. Despite a low unemployment rate and increasing wage growth, 65 percent of Americans aren’t saving enough money to retire comfortably or make it through a financial crisis unscathed.
Fortunately, saving money doesn’t have to be difficult, even for those with lower incomes.
Whether you want to sock money away for retirement or to cover expenses in case of an emergency, there are many reasons to save money. If you’re not currently setting aside any of your income, it can seem daunting to start. Here are seven simple ways to trick yourself into saving money.
This is one case where not thinking much about what you’re doing can pay off. Set up automatic transfers from your checking account to a savings or retirement fund so you don’t have to think about manually moving money between accounts.
You may not think spare nickels and dimes make a big difference, but they absolutely can. Empty your wallet and look for loose change around the house, then exchange them for bills at your local bank for a small fee or use a coin exchange machine at the grocery store. Doing this a few times a year can easily add up to $100 or more in savings.1
If you don’t use cash often, apps like Acorns can round up the purchases you make with your credit card and deposit the additional funds into an investment account.2
Many of us earn extra money in the form of a tax refund or holiday bonus. While you may want to use it to splurge on an item you normally wouldn’t be able to afford, resist the temptation and put that check into savings instead. In a few months to a year, you’ll be happy you decided to build your nest egg with those extra funds.
If you’ve recently paid off a car loan, take the money that would go toward your monthly payments and set it aside. This can help you afford a car repair or even save up to buy a new vehicle in a few years.
The same holds true whenever you cancel a subscription or disconnect a service. Instead of spending that money, put it into your savings account. Since you were already paying for it every month, you’ll never miss it.
Cash-back credit cards reward you for spending, typically by offering a refund of 1 to 5 percent on your purchases.3 However, you will need to pay off your entire balance every month to reap these rewards without owing interest. It is advised to use cash-back credit cards for smaller purchases and pay the balance off immediately.
In this digital era, it’s easier than ever to manage your finances. There are many apps out there that give you a snapshot of your spending, let you set budgets and even offer tips for saving.4 There’s no excuse for not knowing where your money is going.
Credit cards are great for building credit and earning reward points if used correctly, but they also make it easy to spend mindlessly.5 If you find yourself charging beyond your means, try going on a cash-only diet for a few weeks. Withdraw a specified amount of cash and use only that money to make purchases. You may end up making fewer impulse buys, which can help you have more funds to put into savings.
Small steps can help you achieve your goal of saving money, but if you need additional assistance managing your debt, contact the credit counselors at American Financial Solutions. They can work with you to develop a plan to help you reach your goals, so you can enjoy a more stable financial future.
Call (888) 864-8548 or visit us online to get in touch with one of our counselors today.