If people can usually easily cut some expenses in one area of their life, it is a lot harder not to spend it in another straight away. The problem really isn’t so much saving money as keeping it saved, which is why you might need some tips for long term strategies.
As we really can’t trust ourselves to do the right thing on our own, you might need to set up automatic transfers from your current account into your savings account, so that you’ll definitely have something saved every month. Plus, it is likely you won’t ever notice or miss the money, as it will be taken directly from your account every month!
What could also work brilliantly for you not to be reminded constantly that you have money available to spend is to set up your savings account in a different bank from the one where your current account is. Of course, do not ignore your retirement accounts completely (keep your text or email alerts in case of unusual activity), but you can choose paperless statements, so that you won’t need to check them more than once or twice a year and to be tempted to use it.
Being able to set up multiple sub-accounts and to label them according to their purpose means that you will be able to differentiate and to have a separate relationship with all these different savings. For instance, you won’t see in the same way money that you have saved to go on vacation, to pay property taxes, buy a new car, or for your dream holidays. You might not be able to change the name of your retirement fund, but you can give a nickname to your IRAs for instance.
Apps such as Digit, Acorns or Bank of America’s program Keep the Change are great ways to help you save some money, as they invest spare money into your savings, even rounding up your purchases and transferring the change to your savings.
Apart from some money strictly set up for emergencies, you shouldn’t be able to access your savings too easily. You can for instance set up some certificates of deposit for your savings and keep in mind that retirement funds follow a 25% to 50% taxes and penalties any time you withdraw some money.
If you use a rewards credit card, you should absolutely save your rewards, which means you should not use them, so that you can regularly transfer them to your savings or IRA.
A great option would also be to invest any money you do not spend any more into your savings. For instance, any time you cancel a subscription or pay off a debt, you should redirect that money into a safe place.
Whether it is rebates, bonuses or refunds, money that you get unexpectedly is always great news, but you should spend only a little in fun things, then put the rest into your savings.
We know it’s not supposed to be fun, but have some fun with saving! You could save any £5 note that you get, have a jar for spare coins or even a swear jar in order to save every month a little bit into your savings account.
Obviously, you don’t need to put your whole raise into your savings, but if you get a 4% raise, you could put 2% into your IRA or your 401(k) in order to improve your future.