How to start saving: 7 ways to build your savings account

February 22, 2024

By Lois Sullivan

How to start saving: 7 ways to build your savings account

A woman sits in her home with her laptop and has a look of contentment

Saving money is one of the best financial habits you can establish in your life. Learning to budget and cut spending often go hand in hand with saving. When you are setting up and building your savings account, making small changes to how you approach your finances can make a big difference in the overall growth of your account. Here are seven tips that can help you save and get into this positive habit.

Create and stick to a budget aimed at building your savings

Before you can start saving, you need to know how much money you have coming in and where it's going on a regular basis. Establishing a budget is the most effective way to see what you earn and spend each month. Of course, your finances can fluctuate, especially if you're a gig worker or your work schedule changes routinely, as well as when unexpected expenses pop up, so it is a good idea to leave some flexibility in your budget. No matter your situation, budgeting is still an excellent tool for saving money.

Start by collecting your bank and credit card statements for a few months. Use these to determine what you're regularly spending on items like housing, food, utilities, transportation, personal care and entertainment. Set up categories and allot purchases to each category to get a baseline budget. You can also use your pay stubs to determine how much you earn on average and make sure your spending falls under that total. Include saving as one of your budgeted categories and determine how much you can move into your savings account every month.

Implement the 30-day rule

Have you ever heard of the term "retail therapy?" Many people use shopping, whether online or in-person, as a way to relieve stress, and it turns out that science backs up this habit. When you make a purchase, your brain releases dopamine, a hormone that makes you feel good. As a result, you may continue to seek out the activity that caused this positive feeling, resulting in excessive shopping. Browsing in a store can also provide sensory stimulation, which can remove you from reality for a time.

It's easy to get in the habit of spending whenever something catches your eye, but even small purchases add up quickly. Instead of buying everything you want in the moment, implement the 30-day rule that allows you to consider the purchase. The 30-day rule is a cooling-off period for you to mull over the purchase and decide whether it's really worth it. You can also use that time to assess your budget and see if you can afford the item.

Cut back on online shopping

Online shopping is incredibly convenient, and many people grew to rely on it during the pandemic when they didn't leave home often. But when you're shopping online regularly, you may find that you're spending a lot more than you would have if you shopped in a store. When online retailers save your payment and billing information in your account, spending money often takes just a few seconds.

Make it harder to shop online by deleting your saved payment information from all of your accounts. If you have to enter your credit card number every time you make a purchase, you may find this inconvenience helps you cut back. You can also use the 30-day rule for online purchases and decide whether you really need or want the item before purchasing it.

Cancel subscriptions you don't need

Subscriptions are everywhere, and many companies are capitalizing on customers who don't use their services. Take a few minutes to review your bank statement and credit card bill to figure out what recurring charges you might be paying each month. Streaming services typically renew automatically, so you might be paying monthly for a platform that you don't use very often, if at all. You can also try to avoid signing up for free trials that require you to input payment information, as you may forget to cancel before the trial ends.

Prepare before you shop

Impulse buying is a real thing, and it affects people in all types of stores. Retailers know buyers are more likely to pick up items while waiting to check out, which is why checkout lines feature low-cost goods like candy bars, gum, snacks and magazines. Even adding a couple of these items to your basket can add up, especially if you're doing this every time you shop.

Instead of picking out whatever looks good at the store, prepare by making a list of what you need and sticking to it. When grocery shopping, plan your meals and list the ingredients needed. Check your fridge and pantry before you go to make sure you’re not buying something you already have. Eating a balanced snack before you walk into a grocery store is also a great idea, as you may be tempted by tasty-looking food options if you're hungry.

Lower your ongoing bills

Although you can't eliminate certain bills, you may be able to negotiate a lower recurring price or change your plan to get the cost down. One example is cell phone service, as many people overpay for features they don't need or use. If you have the top-tier cell phone plan, check how many features you use and whether you could drop down to the next tier. Do the same with your cable or satellite TV bill, or cut the service altogether and switch to something cheaper.

If you have debt that you're paying every month, consider contacting the lender to determine if you could qualify for consolidation or a lower monthly payment. Some lenders offer income-driven repayment options, which base the amount you pay on how much you earn. You could also consider refinancing your outstanding debt or enrolling in automatic payments to qualify for a discount.

Use high-yield accounts to help boost your savings account growth

Keeping your money in a high-yield savings account is a great tip for increasing how much you can save, as you can earn additional interest without making any changes to your lifestyle or habits. Savings accounts typically offer higher interest rates than checking accounts, so set up both account types to maximize what you can earn. Set a goal to save a certain percentage of your income or increase the balance in your savings account by a certain amount within a year. Using a high-yield account can help you achieve that goal faster.

Alliant Credit Union offers high-yield accounts that make implementing good habits for saving money easier. By preparing for your financial future, you can alleviate stress and ensure you have what you need to care for yourself and your loved ones.

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