Savings Strategies

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In today’s economy, having an emergency savings account can help you sleep a little better at night knowing it provides you with a fiscal security net. Saving for emergencies doesn’t have to be difficult as there are many ways to do so without altering your lifestyle all that much.  Here are 13 simple tips to build up your savings account. 

Automatic Savings and Bill Pay. 
Set up an automatic draw on your checking account to be transferred into the savings account. This way you can think of it as paying a bill. You don’t even have to remember to do this each month as financial institutions make it easy to setup this service online through their bill pay option. 
 
Pay Yourself When a Debt Service Ends. 
Once you pay off a car or a payment plan, continue to pay that debt service amount into your savings account. Your standard of living already assumes that money is spoken for each month so this gives you a good opportunity to sweep those funds into savings.
 
No Impulse Buying. 
Many of us are guilty of going into a store and walking out with an item or items that we had no intention to buy. These impulse buys can add up and many times are for items we don’t need. Before making a purchase, make it a rule to “sleep on it” so you’ll know if it is something that is really needed or if the impulse moment has passed.
 
Keep the Plastic at Home. 
Having a credit card in our wallet enables us to think about purchasing items as if we had the entire credit limit in our hand. Those who use credit cards to make purchases have been found to spend more than if they had to pay by other means. Credit cards makes it too easy to spend money that one doesn’t have so keep them at home and use them only when absolutely necessary.
 
Budget the Fun. 
Cutting fun out of your life to maximize savings can lead to a dull lifestyle.  Entertainment provides benefits for both our mental health and state of mind and it keeps our life from being too dull. Budgeting for entertainment expenses enables you to be proactive in the amount you spend and avoid a lapse in judgment to just have fun no matter the price.
 
Keep the Right Money Mix. 
Many checking accounts don’t pay interest. Tally up two months of expenses and that should be the upper limit balance to be kept in a non-interest bearing checking account. Transfer the excess amount into a higher yielding savings account where those excess funds can earn interest. 
 
Save the Small Purchases for Larger Ones. 
To see savings in action and the benefit it holds, try this exercise. Identify a small routine splurge, such as an energy drink, and try to forgo it in exchange for something larger, such as tickets to a sporting event. Keep track of each small splurge that you gave up and once they total the price of those Cavalier basketball tickets, use your savings to enjoy the game!
 
Reward Saving Benchmarks. 
To provide an incentive for saving, reward yourself when you reach a specific saving benchmark. For example, make a rule that for every thousand dollars saved, you can spend a hundred dollars guilt free on whatever you wish. 
 
Cut Back on the Window Shopping. 
Window shopping leads to impulse buying so remove the temptation. Go to stores to make purchases based on a predetermined list.
 
Respect the Savings.
Think of the savings account as someone you care about. Don’t abuse it by making excuses to spend the money on non-emergency items. If you want the money there for when you need it the most, be sure to respect it by keeping it as an emergency fund only.
 
Add a Little Buffer.  
Financial institutions make it so easy now to do every conceivable financial transaction through one firm. This can make our lives easier but can also make it a little too easy to think of the emergency savings as just another source of funds for that big television. By keeping the emergency savings in a different financial institution, you can establish a buffer of two or three days for a money transfer and that will give you time to rethink your purchase.
 
Enjoy the Power of Compounding. 
Albert Einstein once said, “The strongest force in the universe is compounding interest.” The ability to generate interest off of previously earned interest can generate a snowball effect of interest gain. Time is a major component of compounding interest. The sooner you begin to save, the more of an impact it will have.
 
Make Saving Mandatory. 
Add savings to the list of “death and paying taxes” as inevitable items you must do in your life. This way it becomes an item that you accept as something that you must contribute towards but you get to reap all of the benefits.
 
Hopefully these saving ideas will help you create an easy to follow savings plan to establishing that elusive emergency fund that we all should have. 
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