Use these tips to build your financial fitness
Easy Steps to Saving More
Meet your financial fitness goals by building your emergency savings, reducing your spending, and growing your retirement funds.
If you’ve set a financial fitness goal to save more, tackle your goal by taking small steps and building on your progress. Start with establishing or growing your emergency savings, then review your spending to save on monthly expenses. Finally, take steps to set aside funds to plan for a comfortable retirement.
Are you ready to increase your financial fitness? Let’s get started!
Build your emergency savings
If you haven’t been saving much, you’ll want to start by making sure you have an account for emergencies, unplanned expenses or changes in your income. Although most experts recommend keeping three to six months of income in a separate account, that number can feel overwhelming to many. Start with a goal of $1,000 and start building your savings with these tips.
Set up an automatic deposit to a savings account (payroll deduction with each paycheck). You will be less tempted to spend it if you don’t see the cash or the funds in your checking account.
Make it a commitment
Treat savings as if it was an ongoing bill or obligation, and make a savings “payment” to yourself with every paycheck.
If you haven’t been saving, start small and increase the amount you save each month ($1 a day, then $2 a day, etc.).
Give your savings the raise
If you get a pay increase at work, add the amount of your raise to your monthly savings. Since it’s money you weren’t spending before, you are less likely to miss it!
Deposit extra money to savings
Commit to depositing the money you receive outside of your normal income – bonuses, gifts, tax refunds, etc.
Reduce your spending to save more
If you don’t have a monthly budget, you are not alone. Less than a third of Americans create and follow a spending plan. Ideally, creating and sticking to a budget will help you meet your savings goals faster. But if you’re not ready to commit to a budget, tracking and modifying your spending could still help you achieve some savings goals.
Ask for the receipt
Keep all of your receipts every month (even for cash purchases) and review these along with your bills to see where you are spending every month.
Create a mini-budget
If you know you tend to overspend in certain areas (clothes, dining out, entertainment), create monthly spending limits for yourself and track your purchases. Try to reduce your spending each month and add the extra to your savings account.
Plan your shopping
Make lists before you head out to shop, and look for deals in advance. There are hundreds of sites that post coupons and promotion codes, as well as phone apps that allow you to compare prices. Just remember that a great deal isn’t a great deal if you didn’t really need it or can’t afford it.
Start or grow your retirement savings
Many people have little saved toward retirement, and about a third of Americans have nothing saved at all. Make a plan to start increasing your long-term savings and build up the amount you save over time.
Contribute to your company’s 401(k) or 403(b)
Many employers provide these retirement plans and often offer matching dollars up to a certain percentage of income. If you’re eligible, start contributing a small amount each paycheck. And if you are already contributing, commit to raising your contribution each year.
Open an Individual Retirement Account (IRA)
An IRA is another great way to build your retirement savings. Learn more about the structure and tax advantages of ROTH and traditional IRAs. Most providers have low opening balances and allow you to deposit through payroll deduction.
When you wait to start saving, you lose out on years of your money growing through compounding interest. The sooner you get started, the easier it will be to grow your funds and secure your financial future.
Now that you have some ideas, make a commitment and set some goals in writing. Soon you’ll be on your way to greater financial fitness!