Did you make a resolution to save more money in 2020? There’s still plenty of time to make it happen. Follow these tips, and by the end of the year, you’ll be an expert on how to save money—and you’ll have a bigger savings account balance to prove it.
1. Have a Budget
Saving money doesn’t just happen—you have to have a plan. That’s why, if you’ve got a dream, you need to have a budget too. Creating a budget forces you to face your spending habits as they really are, decide what your priorities are, and then change your habits accordingly. You may be amazed by just how much you’re spending each month and by how much you can save by having a budget.
Check out our financial planning worksheets for help creating a budget that works for you.
2. Remind Yourself Why You’re Saving
It can be hard to delay the gratification you get from a new purchase (like that pricey coffee drink or another pair of sneakers) in favor of saving your money. That can be especially true if you’re months or years away from meeting your savings goal. But you can make it easier to ignore temptation by making your savings goal feel more real.
Saving for a once-in-a-lifetime vacation? Keep a photo of your destination as a screen saver on your phone. Saving for your dream wedding? Change the background image on your computer screen to a picture of your dream wedding venue. When you’re tempted to overspend, look at the picture and think about the benefits of saving instead of spending. Thinking about how good it will feel when you’ve reached your goal can help you change spending habits and reach your goal faster.
3. Pay Yourself
Everyone loves getting paid. So think of saving money as paying yourself. This can help you prioritize saving, rather than waiting to see if you happen to have any money left over at the end of the month.
Open a dedicated savings account and make sure you pay it regularly by setting up reoccurring, automatic transfers from your checking account or using direct deposit to put part of your paycheck straight into savings. Seeing the money appear in your account can be addictive. In fact, you may even come to look forward to this “savings day” nearly as much as you look forward to payday.
4. Send “Found Money” Straight to Savings
You know that great feeling you get when you unexpectedly find money in between the couch cushions or in a jacket you haven’t worn in months? Make that feeling last by putting that money toward your savings goal, rather than spending it.
Deposit birthday money, tax refunds, raises, bonuses and any other unexpected income into your savings account. Since you weren’t counting on having that money anyway, saving it won’t put a dent in your lifestyle, but it will provide an instant, satisfying boost to your savings account balance.
5. Don’t Touch Your Savings
It can be tempting to treat your savings like a cookie jar you can reach into anytime. But if you do that too often, when a big opportunity (or emergency) appears, there may be nothing in there to grab. Think of your savings as something that’s off limits except in case of an emergency or once you’ve reached your savings goal.
You’ll be less likely to touch your savings (and more likely to earn dividends!) if you use a dedicated savings account, rather than letting your savings sit in your checking account. If you have a long-term savings goal and don’t expect to need your savings anytime soon, try putting the money you’ve saved up so far in a term certificate. This kind of savings account, known as a certificate of deposit, or CD, when it’s offered by a bank, rewards you with a higher savings rate in exchange for your commitment to leave the money in the account for a set number of months or years.
6. Don’t Let One Mistake Lead to More
When it comes to saving money, nobody’s perfect. From time to time, everybody spends more than they should. The most important thing is not to let one splurge turn into an avalanche of overspending. Rather than turning a cheat day into a cheat week or cheat month, learn from your spending mistake and get back on track. Your savings account (and your savings goal) will thank you for it.
Finding the Savings Account That’s Right for You
Now that you know more about how to save money, you have to decide where to save it. Whether you’ll benefit most from a basic savings account, a money market account, or a term certificate depends on how much you’ve saved so far and what your savings goals are.
Make 2020 your best savings year ever! Compare USE Credit Union savings accounts, open yours, and start earning dividends today.