April 19, 2024
Supercharge Your Savings: Surefire Tips to Grow Your Money Faster

Savings are key to achieving financial stability. Experts routinely suggest storing three to six months of expenses in a savings account in case you lose your job or have an unexpected expense like a blown tire or an appliance repair. Savings can help you avoid incurring debt to purchase big-ticket items like a new TV or computer system. Savings can also help you achieve financial goals like saving up a down payment for a home.

But for some, saving money may seem on par with communicating in a foreign country where you don’t know the language. If you didn’t grow up learning from savers, the concept may leave you feeling confused and unsettled.

You’re not alone if you struggle to save money. Only 44% of respondents in Bankrate’s latest annual emergency savings report said they could cover an emergency of $1,000 or more from their savings. But don’t worry. Learning to save is a skill you can develop regardless of your current level of financial know-how.

Ways to save money fast

Adding one or more of the following strategies to your routine will help you quickly build up your savings and set you up for a lifetime of healthy financial habits.

Make a budget

To save money effectively, you must first account for all of your income and expenses accurately. Whether you create your budget on a spreadsheet or download the latest budgeting app, there are several classic budgeting approaches to consider. 

Three popular strategies include:

  • 50/30/20 budget: With this approach, you divide your take-home income into three spending categories: 50% for living expenses and essentials (or needs), 30% for discretionary spending (wants) and 20% for savings and debt elimination.
  • Zero-based budget: This technique requires you to create a new budget each month (or pay period) and specify how each dollar will be spent, deducting the amount from your income until you reach $0. With this approach, you create a new spending plan for all of your upcoming expenses each month (or pay period) instead of making adjustments to a previous budget.
  • Envelope method: This form of budgeting, also known as old-school envelopes, calls for dividing your cash into separate envelopes for spending categories such as groceries, eating out or clothing. You then take money from the designated envelope when expenses arise. When an envelope is empty, you stop spending in that area. This is an effective way to control your spending, especially for expense categories that vary from month to month.

Once you complete your budget, you’ll be able to identify any excess money you can redirect into savings. Regardless of the type of budget you decide to use, remember that it takes time to work out the kinks with any new strategy. Be patient with yourself as you adjust to operating from a budget and make changes that fit your lifestyle.

“It takes six months to get the hang of it, but most people quit before then — don’t give up because it doesn’t have to be perfect to be effective!” said Bernadette Joy, a personal finance coach and CNET Financial Review Board member.

Automate your savings

Whether you choose to save weekly, per paycheck or monthly, establishing automatic transfers will help you build a regular savings habit. You can set these up with your employer through the direct deposit of your paychecks or with your bank. 

Banks and credit unions such as Ally and Alliant Credit Union incorporate savings features into their mobile apps to help make the savings process easier. They both offer savings buckets to help you name and organize your savings goals without opening multiple bank accounts. Ally also provides automated savings transfers, round-ups and a Surprise Savings analyzer that monitors a linked checking account for small amounts that can be safely transferred to savings based on your spending habits. 

Open an external savings account

Using multiple external accounts is a strategy that forces you to separate your savings from the bank you use to manage your routine expenses. Keeping a separate savings account at a different bank than the one you use for your checking account helps keep your savings out of sight and out of mind so it can grow unencumbered until you need it.

Look for ways to cut spending

Minimizing your expenses can help you free up more money for savings. Here are some money-saving tips to get you started.

  • Review your budget regularly. Review your recurring expenses, monthly bills and discretionary spending each month for areas you can trim. Look for things like unused subscriptions or gym memberships you don’t use. Shop around to see if you can get a better deal on monthly bills like your cell phone plan, auto insurance and streaming services.
  • Lower your energy costs. Turning down your thermostat is one of the most effective ways to reduce energy consumption and save money, according to New Hampshire’s Department of Energy, which says you can save up to 3% on your energy bill for every degree you lower the temperature in your home. Those savings can add up over time and pad your savings account. Add an extra layer of clothing in the winter or open the window for fresh air in the summer to save energy and money while staying comfortable.
  • Do it yourself. Taking on a DIY project can help you keep more of your hard-earned cash. Whether that involves a home improvement project or eliminating a routine trip to the nail salon, DIY projects can add up to big savings if you know what you’re doing.
  • Have a no-spend month. Challenge yourself to use what you already have. Often, a no-spend month will illuminate any ways you’re wasting money on unnecessary purchases. It can also force you to find more budget-friendly options, like finding free activities in your community or hosting a clothing swap with friends. If you want to start out small, try a no-spend day.
  • Make meals at home. Americans spend an average of $166 per person each month dining out, according to a survey conducted by US Foods. Eating out or paying for food delivery adds up quickly. Commit to making more meals at home to shrink your overall food budget. Take it a step further and cut your grocery shopping costs by setting aside time each week to meal plan.
  • Pay with cash. Paying with plastic or digital payment services such as Zelle or Venmo can lead to overspending or impulse buying, according to researchers. Paying with cash, which you can see dwindling as you spend it, makes you evaluate your spending decisions and spend less.
  • Save money on everyday purchases. Look for ways to spend less on the things you buy. Comparison shop for lower prices, use free apps to find coupon codes for online shopping and visit thrift stores for clothes and household supplies. The less you spend, the more money you can put toward savings.

Pay down debt

Paying off debt can free up a substantial amount of money to help you save money faster. According to LendingTree, Americans pay an average of $1,583 monthly toward debt. If you can start putting the money you’re paying on high-interest debt like loan and credit card debt into a savings account, you’ll accumulate a significant amount in no time. You’ll also have compound interest working on your behalf and not against you. 

Paying off debt may take some time. You can connect with financial counselors to help you craft a debt repayment plan. It’s important to be patient and trust the process. Also, learning from the experience of others who’ve paid off debt can motivate you to accomplish this goal.

Boost your income

Increasing your income is another way to accelerate your savings progress. Here are a few ways to add more money to your bottom line.

  • Look for opportunities at your current job. Finding a higher-paying job is one way to boost your income. But you can also look to your current employer. Look for ways to move into a higher-paying position or take on more responsibility that will lead to a raise. Ask your supervisor if opportunities are on the horizon. Let it be known that you’re looking to advance your career.
  • Start a side hustle. A second job doesn’t have to take up a ton of your time. If your schedule permits, take advantage of the gig economy to earn some extra cash in whatever free time you have.
  • Profit from your hobbies. Teach others to do something you love or sell things you make from hobbies like crafting and earn money in the process.

Sell your unwanted stuff

When you sell unused items taking up space in your home, you get a twofer: You clear away clutter and can add the proceeds to build up your savings. Using garage sales or Facebook Marketplace to connect future owners with your unwanted things is a win-win. Consignment sites such as Poshmark and thredUp will take your gently used clothing, sell it for you and give you a percentage of the proceeds. 

Get rewarded for your everyday spending

Signing up for a cash-back app is an effortless way to earn money on the items you buy. These apps pay you a percentage of the amount you spend with specific retailers, and some also pay you to refer your friends and family.

For instance, Upside pays you 25 cents per gallon of gas purchased and up to 30% back on groceries. Calculate how much you spend on gas and groceries in a year and imagine a percentage of that earning interest in your savings account.

You can also earn extra cash from your purchases by using a cash-back credit card — but only if you can pay off the balance in full each month. Otherwise, the interest charges can nullify any credit card rewards you earn.

Bank your windfalls

Windfalls are sources of income, such as bonuses or tax returns, that aren’t part of your regular income. Before you mentally spend any windfalls, decide how much you will add to your savings first. The more you set aside, the faster you’ll reach your savings goals. Get in the habit of banking any windfall sources of income to boost your savings efforts.

Where to put your savings

Whether you want to build an emergency fund or you’re planning to save for a short-term goal such as a dream vacation, the following types of savings accounts will help you boost your interest earnings and save money faster.

High-yield savings account

A high-yield savings account, or HYSA, is an ideal place to store cash you want to set aside for emergencies or a special occasion. Like traditional savings accounts, HYSAs are insured for up to $250,000 per depositor per institution by either the Federal Deposit Insurance Corporation (for banks) or the National Credit Union Administration (for credit unions). A high-yield savings account is also liquid, so you can access your money when needed without penalty (as long as you mind any monthly withdrawal limits).

However, unlike a traditional savings account, HYSAs offer annual percentage yields, or APYs, nearly 10 times higher than the national average. Storing money in a high-yield savings account allows you to accelerate the rate at which your savings earn interest and grow your savings faster through the power of compound interest.

Most HYSAs are found at online banks and typically have higher fees than traditional savings and money market accounts. If your savings account isn’t earning at least 4.30% APY, consider switching to a HYSA. Most can be opened within a few minutes.

Note that while many of the high-yield savings accounts on CNET’s best list boast APYs of 5% or more, savings account interest rates are variable and can change at any time without notice at the discretion of the bank or credit union. 

Certificate of deposit

Certificates of deposit, or CDs, are timed savings accounts that offer fixed interest rates. You agree to deposit a lump sum of money, known as the principal, for a fixed period, or term — typically, three months to five years. In exchange, the bank locks in your APY for that term.

You’ll often earn a higher APY with CDs than you would with typical savings accounts, and there’s less risk involved than with investments like mutual funds. Like HYSAs, CDs offered through an FDIC- or NCUA-insured institution are protected for up to $250,000 per person, per institution.

However, while CDs are great for accelerating your interest earnings, you should make sure you won’t need the money in the CD for the entire length of the term. Otherwise, you may end up paying early withdrawal penalties — typically ranging from 90 to 365 days depending on the term — to access your money early. Withdrawal penalties can eat away at your interest earnings and should be avoided. 

Saving money is within your reach

Saving money is a skill everyone can develop. Using one or more of the strategies outlined above will help you pad your savings stash in no time. Developing a savings habit can take time, but it will provide life-long benefits.

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