Building wealth starts with your saving habits more than anything else. To get richer in 2016, revamp some of your old ideas about saving and build your account balance with a savings challenge or two. Get your savings in shape in 2016 with these seven saving strategies.
Financial Spring Cleaning
Spring is a great time to get your finances in order. Chances are you’ve just recently filed your 2015 taxes, and have a few new ideas for how to organize your paperwork. This is the perfect time to implement those ideas. Also, take a look through your accounts.
- Could you simplify your life by consolidating multiple checking or savings accounts?
- Combine retirement savings accumulated through different jobs?
- Any bills you can set to autopay so you never have to pay a late fee?
- Maybe try to set up an automatic savings plan so you make progress towards your savings goals without lifting a finger.
Check Your Credit Score
Check your credit score through the three different credit tracking agencies, Experian, Equifax, and TransUnion (personally, I use Credit Karma since it’s free!). You are looking at your number of course, but you also are looking at your whole credit report to see if any errors may have been made that are lowering your overall score.
Potential employers will sometimes check your credit history too, so it is well worth your while to make sure your history is accurate. Your credit score and history are used by potential lenders to help decide whether or not to grant you a loan or allow you to open another line of credit and determines what kind of an interest rate you can expect.
Saving money starts with understanding where your money is going. Most experts recommend tracking your spending for a few months before beginning to budget. This tells you where you are starting from, and may point out some areas ripe for budgeting.
You may prefer to carry around a notebook and pencil and write down every transaction. If you tend to pay for everything with cards, you can make use of electronic money tracking software like Mint.com or Personal Capital. These systems allow you to view and categorize all of your account balances and transactions and lets you use the categories to view trends in spending and income over time and break down your spending and income in different ways.
Try a New Savings Strategy
If you have a long-standing financial strategy in place, you are already ahead of the curve. You probably don’t want to fix something that isn’t broken, but if you want to increase your savings, you may need to revamp your current strategy. This is where a financial consultant can be very useful. A private wealth advisor like Merrill Lynch executive Patrick Dwyer can help you take a survey of your assets, income stream, and debts and help you make a new plan for building your savings.
A certified financial planner can also assist you with this, and many will work by the hour and can help you either with a one-time survey or on an annual basis to tweak your savings plan, investments, and debt management strategies.
If Warren Buffett will save a penny when he can, shouldn’t you? Think in terms of saving your change from every cash transaction, or start an automatic savings withdrawal from your checking account every month. If your budget is really tight, think about taking up a side gig that will earn you a little extra money each month. The internet is a great resource; from selling your iPhone photos on a stock photo website to writing website content for a couple cents per word you can usually earn a couple hundred dollars extra per month. All of that money can go towards your savings goals.
Try a Savings Challenge That Suits You
To jumpstart your savings, try a savings challenge. There are many of them out there on the internet, some of the popular ones include the 52-Week Savings Challenge and the No Spend Challenge, with the popular variants of the No Spend Day, No-Spend Weekend, Week, Month, and so on. These savings challenges are designed to help you create a saving habit, but in the process, you can usually build up a little chunk of money to add to your savings account. Savings challenges are fun, especially if you start one with a group of other people that you can chat with about your experiences during the challenge.
Build Wealth Slowly
This one is more philosophy than a tip. Remember that wealth is usually built slowly through many small decisions made in your everyday life. Get rich quick schemes are almost always a bad idea, and real shortcuts in finance are the exception, not the rule. Watch your spending, be sure to put away money from each paycheck or every month, have clear financial goals, and get some expert advice occasionally. Build your wealth slowly and steadily.
These are just a few suggestions on how to revitalize your approach to savings this year. Try one or all of them, and watch the benefits accumulate in your savings account.
My name is Derek, and I have my Bachelors Degree in Finance from Grand Valley State University. After graduation, I was not able to find a job that fully utilized my degree, but I still had a passion for Finance! So, I decided to focus my passion in the stock market. I studied Cash Flows, Balance Sheets, and Income Statements, put some money into the market and saw a good return on my investment. As satisfying as this was, I still felt that something was missing. I have a passion for Finance, but I also have a passion for people. If you have a willingness to learn, I will continue to teach.