How to Speed up Savings
Once you start saving, we predict you’ll really enjoy the feeling of watching your savings grow, and being more in control of your finances. You may also be wondering “how can I save even more money?” Well since you asked, we have a few suggestions on how to save even faster:
Cut costs. By looking at your budget or reviewing your transaction history, you can tell where to trim costs down so you have more money left over to save. For example, if you know you’re hitting the convenience store for after school snacks and drinks multiple times a week, take one of those times and bring an extra snack from home instead. Then you’ll have another five bucks to put to your savings each week, and an extra $20-$25 each month in your budget.
Put your savings in a high-yield savings account. While the national average interest rate (also known as APY, the annual percentage yield) for savings accounts is only 0.06 percent, some online banks are able to offer interest rates on savings that are ten times that. This means you’ll earn money simply by depositing it. Remember to compare the interest rates online that different banks offer, and check for account fees, if there’s a minimum balance, or if the account requires you to stash a certain amount to earn the higher interest rates.
Invest your money. No need to become Leonardo DiCaprio from The Wolf of Wall Street to dip your toe into the world of investing. There are several options that are lower-risk that you might start with. Certificates of deposits are similar to using a savings account, but you can’t access the deposit for a set amount of time. This ranges from a matter of months or years depending on what kind you purchase. In exchange, you can get higher interest rates than in a savings account. Purchasing bonds means that you basically become a small-scale lender to a company or municipality. In exchange for lending your money, you get your initial loan back after a set period plus interest. Mutual funds, another option, pool the investments of many people. The funds are the composite of investing in many different sources, like stocks in companies as well as bonds. This way the risk to the investor is smaller than an investment in a single entity.
Savings Tip: Use cash? Have a lot of spare change laying around? Even saving spare change can add up over time. In 2016, a waste disposal company estimated that Americans throw away $62 million each year in spare change. And while we doubt this needs saying, don’t throw away your money! Consider keeping a coin bank and putting all of your loose change into it at the end of the day. It can add up: one man saved over $5,000 in 20 years that way, about $250 a year, while a man in Florida collected $21,000 over ten years just by collecting coins around town.