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By Lois Sullivan
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. Other small changes can make a big difference in the growth rate of your savings account. We've compiled seven tips to help you start saving and get into this positive habit.
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 get an overall view of what you earn and spend each month. Of course, these amounts can fluctuate, especially if you're a gig worker or your work schedule changes routinely, as well as when unexpected expenses pop up. No matter your situation, budgeting is still an excellent tool for saving money, so it's worth setting up a budget.
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 figure out 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.
Have you ever heard of the term "retail therapy?" Many people use shopping, whether online or in person, as a way to release stress, and it turns out that science backs up this habit. When you make a purchase, your brain's hormone neurotransmitter 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 can 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.
Online shopping is incredibly convenient, and many people grew to rely on it heavily during the pandemic when they didn't leave home very 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 adding it to your cart.
Subscriptions are everywhere, and many companies are capitalizing on customers who don't use the 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.
Impulse buying is a real thing, and it affects people in all types of stores. Retailers know that buyers are more likely to pick up items while they're waiting to check out, which is why checkout lines feature low-cost goods like candy bars, gum, snacks, and magazines. But 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. If you're headed to the grocery store, plan your meals and make a list of the ingredients needed. Check your fridge and pantry before you go to make sure you're not buying something you already have. It's also smart to eat a balanced snack before you walk into a grocery store, as you may be tempted by tasty-looking food options if you're hungry.
Although you can't eliminate certain bills, you may be able to negotiate a lower recurring price or change your plan to get the bill 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're using and whether you could drop down to the next tier. You might also 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 on every month, consider contacting the lender to find out whether 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.
Keeping your money in a high-yield account is a great tip for saving money, as you can earn interest that doesn't require 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. You might 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 it easier to implement good habits for saving money. By preparing for your financial future, you can alleviate stress and ensure that you have what you need to take care of yourself and your loved ones.
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