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Savings are usually used to meet short-term financial needs such as putting money aside for an emergency or to make a down payment on a car. It is money you want to be able to get at quickly, with little or no risk.
To build up your savings, plan to save some money every month. You might keep track of your spending to see how much you currently save each month and then plan how much you are going to save on a regular basis.
To build up your savings faster, take advantage of compound interest. Interest paid on previously earned interest as well as on the original deposit helps savings to build up. Along with compounding, adding savings each month and leaving accumulated savings untouched helps you to save for the future.
What strategies can you follow to save
more?
If possible, have your employer automatically deduct money from your paycheck and deposit it into a savings account. You won't miss what your don't see if the amount is small. Try putting pocket change into a large envelope or jar. At the end of the month deposit it into a savings account. Put refunds, raises or bonuses into savings. Send in product rebates. Deposit windfalls or unexpected money such as inheritances or gifts into savings. After paying off a loan or credit card, put that same amount each month into savings. Or, put it toward paying off another loan.
What strategies can you follow to spend
less?
Look at the various ways you spend money to find ways to economize. Think of your spending and saving priorities and those changes you can make right now and other changes you might make for the longer term.
Break costly habits and save the difference. When you need items, consider shopping at thrift stores and garage sales. Set dollar limits on how much to spend on food and cut down on meals eaten away from home. Eliminate impulse buying on clothing and other types of purchases. Increase your deductible on homeowners and automobile insurance. Drop collision insurance when you car's value has dropped sufficiently. As winter approaches, lower your thermostat setting, wear warmer clothing in the house to decrease heating costs. Make gifts. Think of jobs that someone would appreciate having you do for them and give that gift of your own personal services. Trade or barter skills, talents or resources with a friend or neighbor instead of buying the service or item.
How can you better manage your money to
increase savings?
Carry only the amount of money you plan to spend. Carrying large amounts of cash only encourages spending. At Christmas only spend the amount you can pay in cash rather than buying on credit. In general, try to limit your use of credit cards-they can encourage you to buy things you don't need. Take advantage of community services such as concerts, fairs and public tennis courts. Read magazines and books, and borrow compact discs and videos from the library. Cancel memberships that have lost their usefulness or subscriptions for reading materials that remain unread. Use credit cards only if you pay the bills in full each month. If you must borrow, learn everything about the loan, including interest rate, fees and penalties for late payments or early repayment. Never respond to any offer that makes borrowing sound easy and cheap. It can cost more in the long run. Comparison shop for a variety of items and resources, prices can vary widely.
Take advantage of educational information that is available to you. Extension, in conjunction with a number of organizations provides informational programs, publications and information online. See the Extension website for a variety of consumer resources. The Choose to Save ® education program provides a variety of financial calculators online to help consumers make comparisons and choices. |
