BY Sadediji2gist
Updated August 16 2018
You get two huge benefits from having
money in the bank. First, it feels good
because you can see yourself making
progress towards your goals. It’s also good
for your finances: you can absorb shocks and
surprises without taking on (sometimes toxic)
debt. But how do you actually increase your
account balance to the point of having a
healthy chunk of change in savings?
We all know the formula: Save more and
spend less. That knowledge alone is usually
not enough, but the tips below might help you
pull it off. Before you get into the tactics, it’s
wise to think about your goals (the things
you want, and why you want them) – that’ll
make the whole process more bearable and
improve your chances of success.
Pay Yourself First
One of the most important steps to take is
prioritizing saving. You probably know
exactly how much you spend each month on
housing (your rent or mortgage payment) –
you need to make that payment or you’re out
on the street. Can you say the same about
the money you put towards your financial
security?
The best advice is to “pay yourself first”
which means making sure that you actually
save money. When it becomes a priority –
especially if it’s a line item on your budget or
an automatic process that you can forget
about – it can become a reality. Having a
fuzzy desire to save more isn’t enough for
most people. How can you start doing this
today?
Manage Spending
If you’re in a leaky boat, you need to fix the
problem quickly. The fastest fix for most
people is to cut costs. It’s also the most
painful (and it might not be the most
effective), but it’s a necessity if you want to
increase your savings.
How do you do it? Get a handle on how you
spend. Track your expenses, whether you use
a pen and pad, an app, or budgeting
software . Don’t put too much time and
energy into picking the best “system” to track
your spending – that’s just a distraction (in
this case the perfect is the enemy of the
good).
If you have a hard time keeping track of
things, spend electronically so that your bank
creates a record of every transaction. Pay
your bills online, make purchases with a
debit card (or better yet, a credit card that
you pay off every month), and minimize cash
spending. The numbers won’t lie. Look at
where your money actually goes, and
evaluate if you’re really getting what you pay
for. There are plenty of ways to cut costs .
3 Ways to Earn More
By cutting costs, you can save money this
month. But you’ll probably get better results
if you increase your income (unless you’re
one of those people who earns six figures
and is still diving into debt).
Unfortunately, it takes time to earn more, and
it’s not as easy as canceling cable TV
service. In some cases, switching jobs is all
it takes (if you’ve been with the same
employer for many years and raises have
been slow), but most people have more of a
challenge.
One quick way to earn more is to add part-
time work. That also means you’ve got less
time available for other things, and it’s
grueling to keep that up for decades. But, if
you just need a quick boost, another job for a
few months or so might get you back on your
feet (and your main job will support you and
your family after that).
If you need a more substantial change, start
your own business – you’ll have more
control over your own destiny, and more
upside potential. You can manage your risk
by starting part-time on the side, and then
transition to a full-time gig as things pick
up.
Another tried-and-true approach is to
develop your skills and “employability” so
that you can earn more over time. That might
require more training and education, as well
as a resume that highlights your value to
employers. Over the years, your efforts
should pay off.
Once you’ve built up your bank account, start
earning more on the money you’ve saved.
This won’t make or break you financially, but
you don’t want to leave cash on the table.
Make sure you’re earning a competitive rate
on your savings (there’s probably no need to
switch every month for the highest rate in the
nation), and use CDs and money market
accounts to earn more inter
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