Saving money plays a crucial role in helping you reach your financial goals. It allows you to grow your funds, so when the time comes when you need to make that big purchase or pay for emergency expenses, you have the money to shoulder the cost. However, it can be hard to start saving if you don’t have a concrete plan. Let these simple and practical tips help you make the right financial decisions, as well as give you the confidence to take that first step in your money-saving journey.
Consider Getting a Certificate of Deposit or Investing Your Money
Even if you already have an additional savings account, it might not be the best place to save your money for your medium-term goals. Savings accounts generally have a modest interest rate that isn’t fixed. You can also withdraw your money from your savings account, so reaching your financial goal will take a longer time if you have the tendency to take out money constantly.
This is why you should consider getting a certificate of deposit (CD) for your medium-term financial goals. A CD gives a big boost to your savings with minimal risk. This is because it typically offers a higher interest rate than a savings account, and this interest rate is also fixed, which means you’ll know exactly how much growth your money will be making. Unlike a savings account, however, you can’t withdraw or add money into a certificate of deposit; and your funds will also stay locked for the term. Terms can be as short as 6 months or as long as 5 years and more. A CD is perfect if you want to save up for a car or a dream vacation. Alternatively, you can also consider investing your money in any one of the available medium-term investment options, which include various types of bonds, income-focused mutual funds, and growth funds that are focused on capital appreciation.
To ensure that your money is in good hands, it’s smart to choose a banking partner that makes use of a banking platform that’s designed to help you keep track of your investments. These banks are equipped with the right tools and technologies to provide you with a money-saving plan that’s in line with your goals.
Keep Track of Your Finances
Making a list of your expenses is one of the simplest ways to help yourself save money. When you keep track of your purchases, you’ll know how much money you’ve spent in a day, week, or month. Monitoring your expenses in this manner is a great way to observe your spending habits. If you see that you’re spending too much money on certain items or services, you can take the first step in curbing your overspending habits.
Limit Your Credit Card Use
Using your credit card to pay for purchases is often more convenient and safer than paying with cash. With just one swipe or tap on the point-of-sale machine, your groceries, gas, and even utilities can be paid without hassle.
However, one of the pitfalls of having a credit card is the temptation to overspend. Since you don’t see or feel the money disappear, it can be easy to go beyond your budget—and your credit limit, if your card has an over-limit facility. If you go beyond your credit card limit, the likely scenario is that your interest payments will increase and you’ll have to pay over-the-limit fees. You’ll also have a more difficult time paying back what you owe the bank, and as a result, both your credit limit and credit score could go down.
To ensure that you don’t max out your card or go over your credit card limit, you should limit the use of your credit card to purchasing essentials and paying for recurring expenses. This way, you can gradually build your credit score while accumulating loyalty points or cashbacks that you can later use toward other important payments.
Include Saving in Your Budget
Don’t forget to include your savings when creating your budget. This way, you can set aside some cash before spending money on your groceries, utilities, car and house mortgage, and other payments. This will also prevent you from using the money you’ve saved to pay for other expenses. Remember that your budget equation should always be “income minus savings and investment equals expenses,” not “income minus expenses equals savings and investment.”
Unsubscribe from Services You No Longer Use
Subscribing to more than one on-demand streaming, music, gaming, and online learning service can be stressful. Not only do you have to juggle multiple accounts, but you also have to pay for each subscription plan—often on a monthly basis. Though such services sometimes offer more affordable packages, paying for several plans can still get expensive when you have to pay for them all at once. Unsubscribing to subscription services you no longer use or need is, thus, an easy way to scale back on your expenses and save more money.
Lessen Your Online Shopping Spending
Online shopping is easy, fast, and convenient, so it’s no surprise that there are a lot of people who would rather shop online than shop in physical stores. However, the convenience that this retail model provides can tempt you to buy more and more things, and before you know it, your monthly budget has run dry. Since many online shopping platforms allow you to connect your bank account or credit card to make a quicker purchase, it can be difficult to keep track of how much money you have left.
If you tend to use online shopping apps often, it’s a good idea to place them inside a folder to keep them out of sight and out of mind most of the time. This way, you can prioritize shopping for your essentials, like your groceries, and not be tempted to mindlessly buy other things. You could even delete these apps altogether to go on an online shopping cleanse for a week or month to help you break the habit.
Whether it’s buying your first car or having enough emergency funds to cover unexpected expenses, you can reach your financial goals when you build the habit of saving money. It can be a difficult undertaking, but with the help of the tips above, you’ll be able to save up and work toward a financially secure future in no time.