Tips on Saving Money
So you're planning to open a savings account to set aside more money. Congratulations! You've just made the crucial first step to accumulating more wealth. To help you reach your goals more quickly, here are a few tips on saving money.
Tip #1: Set up an automatic savings plan
As the name suggests, an automatic savings plan is where a fixed portion of one's income is automatically deposited into a separate savings account. While doing this is more convenient than manually depositing your savings, the approach actually makes it easier to set money aside.
Why? Well for starters, it's an effective way of setting money aside. This helps to ensure that you are always able to pay you bills, and have some money set aside to take care of any unexpected expenses that may come up.
Tip #2: Start an emergency fund
To protect your savings from unexpected or urgent expenses, start an emergency fund. To determine the size of this fund, simply calculate how much you spend each month, then multiply it by the number of months you want the fund to last. When saving for your emergency fund, arrange to have a portion of your income automatically deposited to the account and protect yourself from any unexpected expenses that may pop up.
Tip #3: Open a high-interest savings account
High-interest savings accounts maximise your money's potential to earn. With a higher interest rate, you receive more for leaving your money deposited in the account over an extended period of time. Furthermore, a high-yielding savings account would protect your savings from inflation. Throw in the magic of compounded interest (i.e. interest from the principal plus the accrued interest), and you save even more.
Tip #4: Track your monthly expenses
To ensure that you are maximising your potential savings each month you should keep track of your monthly expenses. You can simply write everything down in a notebook, or use your bank's online services, some of which come with free tools for monitoring spending. Remember to keep all your receipts and record everything—down to the last cent. Once you know where your money is going, you can eliminate unnecessary costs and save even more.
Tip #5: Give yourself a budget and stick to it!
Once you know how much you spend each month, set yourself a reasonable budget and follow it to the letter so that you can consistantly contribute to your savings account on a monthly, fortnightly or weekly basis.
Tip #6: Reduce your banking fees
Whether you have a cheque account that slowly drains your hard-earned cash, or you withdraw money at an ATM not part of your bank's network, banking fees accumulate and can tear a sizable chunk away from your savings. To hang on to your money and earn more in interest, find ways to reduce your bank fees. For starters, you can reduce the number of your accounts, keep track of your account balance online, and only withdraw money from ATM's belonging to your bank.
Tip #7: Increase your savings contributions
The best way to save more money quickly is to increase your savings contributions. If you follow these tips, you can set aside more cash on a regular basis, protect your savings from unexpected expenses, and reduce your everyday cost of living—all of which will result in larger deposits into your savings account.