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Many of us have this idea in our head of people who are stacked in wealth and usually that image is painted with the idea of investors. You suddenly image the young people on Wall Street running around, making trades and yelling at each other about a closing deal. As realistic as that may be, wealth-building isn’t just investing.
Wealth-building starts with you understanding the concept of saving and what it can do for you once you begin. Jumping straight to investing and losing your money in a bad choice is risky and doesn’t guarantee return. As always- personal finance is personal, but this week we’re going to talk about how you can begin maximizing your savings and how to begin.
Organize Your Current Income
It’s important to always remember you need a good base, to any plan. To build a solid base is to be able to continue building upward (think about the foundation of a house!). Because of this, it’s important to understand your current income and expenses. Sit down and consider your monthly spending and monthly paychecks. Some questions you should ask yourself include:
- How much money am I currently making post taxes?
- How much are my monthly necessary expenses?
- Do I have leftover money? If so, where is it going right now?
- If you don’t have any extra money, where is that money going?
- Where can I cut back expenses?
- Where can I save money?
By analyzing what you’re spending you’re able to see what is a necessity, and what isn’t. If you’re grabbing a coffee everyday before work, that could be as much as $8 a day, and for 5 days a week, that’s just over $800 on coffee alone. Consider making some temporary cuts for the year, or remainder of to see where you can spend.
Qube Money is an amazing way to save your money digitally and also be able to manage it from your phone directly. Not only does it allow you to create budget envelopes but it also aids you in your goals such as saving money where you can AND paying off your debt. It’s won awards for #1 Budgeting App and is Member FDIC! If your looking for a simple and user-friendly way to start, check it out here!
Cut Back on “Optional” Expenses
Many times we don’t even realize what we are spending on because it’s stuck in hidden fees and subscriptions we forget about. It’s even easier to lose track of expenses when you have more than one credit card, so it’s understandable why it’s such a common area that many people suffer from. Optional Expenses could look like:
- Subscription Services (Netflix, Hulu, Disney+, Magazines, Music)
- Daily Coffee Runs (Dunkin or Starbucks)
- Daily Lunch Runs
- Out-to-Eat Dinners
- Online Shopping
It’s always okay to treat yourself but in moderation! Be aware of over-spending on things that may end up putting you in credit card debt.
If you want to track your expenses and also be able to cancel any subscriptions you may have not known you are paying for, try out Rocket Money!
Open a Checking Account
If you haven’t already open a checking account with a regular brick and mortar to be able to have an account where your money flows. This account should be used for your monthly expenses and be the location where you pay bills and where you need frequent transactions.
Take a look at what bank may work for you, and what promotions may be running at the time!
Open a High-Yield Savings Account
The mistake many make, is they keep all their money within their linked savings accounts at their brick and mortar bank. It is common when you open a checking account, a linked savings accounts is automatically created. Here, your money is making anywhere between 0.01% to about 1.5% at the high end. This means you aren’t earning interest high enough- however can be fixed by opening a high-yield savings account.
HYSA’s are often discussed through wealth-management help and financial advisor inquiries, however this information SHOULD be shared with the masses! If your money is going to sit anyways, why wouldn’t you want it to collect as much interest as possible? High-Yield Savings Account can provide interest rates as high at 5%.
These accounts should not be used to make frequent transactions but rather an area for your money to sit and make money!
Consistency & Automation
The best way you can grow your savings fast is through automating your transactions and income. Talk to your employers about splitting up your direct deposit to be able to automatically transfer into your HYSA. Keep consistent with it, and before you realize it, your account will grow!
Personal finance is personal, however if you are consistently utilizing all these tools and tips, you will most definitely see growth in your money! Make sure to check to see if your bank account are FDIC insured and take a look at all of the benefits that you possibly can.
If you need more information visit nerdwallet.com to read more about accounts! Do your research and happy savings!