Saving Money Basics: How to Build a Solid Savings Fund
Saving money is hard for most people. First of all, there are so many tempting things to spend it on! Also, in this current climate of ongoing economic uncertainty, job transitions have adversely affected many people's savings and emergency funds. And if you have kids or pets, you already know what they can do to the best-laid financial plans.
But there are still ways to save – practical, achievable methods you can use to sock away something for the future. In this post, learn how to build a solid savings fund by following these saving money basics.
Tip 1: Pull your credit report annually
Your credit report will tell you if there are any outstanding issues or merchant disputes that are negatively affecting your credit score. This is important since your credit score directly impacts your interest rate for major purchases such as a home or car. Your credit score also impacts which credit cards you can apply for and what you will pay for basic necessities such as insurance.
By keeping your credit report squeaky clean and working with the best credit repair companies to resolve disputes, you will have more money available to save.
Tip 2: Use savings apps to make saving effortless
Thanks to the internet explosion, you now have a new menu of savings apps to choose from. These apps can help you save without even thinking about it. Even if the app you choose only saves pennies per day on your behalf, that still adds up to dollars by the weekend and tens of dollars by month-end.
Before you know it, you will have a tidy little nest egg going!
Tip 3: Set up automatic bank drafts from your checking to savings account
One of the keys to a successful savings plan is to automate your savings so that you save money before you get your hands on it. One of the handiest tools to do this is also one of the simplest – the automatic bank draft. If you have your checking and savings account linked and you have elected to have your paycheck deposited via auto-draft, savings will be a breeze for you.
Just set up an automatic transfer to your savings account that occurs on the same day your paycheck gets deposited. Experts suggest saving 15 percent of your paycheck monthly if you can swing it, but any amount is better than nothing.
Tip 4: Participate to the fullest extent possible in your company's retirement plan
Where this will help you to save the most is when your employer has a contribution matching program (where your employer will match your contributions up to a certain percentage annually). But even if this isn't available, you can sock away some saved funds on a tax-free basis by participating in your employer's retirement savings plan.
Saving this way also helps you keep from accessing the funds on a whim, since there is a penalty for withdrawal before you reach age 59.5.
See Also: Seven Top Tips for Retirement Planning
Tip 5: Diversify your investment portfolio
If you need a percentage of your saved cash to remain accessible, you might want to put it in a savings account where it won't earn much interest but it will always be there if you need it. As for the rest, put whatever you can spare into your investment portfolio so it can start multiplying.
See Also: 5 Financial Emergencies Everyone Must Be Prepared For
As you do this, be sure to choose a blend of risk-levels so you never risk losing all your savings to an investment gone bad.
By following these basic tips faithfully, you will start to notice your little pool of saved funds growing and growing and then growing some more. All you need to do is get the ball rolling and then you can enjoy the peace of mind that comes with having savings in the bank!
