We can’t predict exactly what the future will bring. But we do have control over how much we can save to protect ourselves from life’s unexpected surprises.
Savings can carry you through stressful times when you need to cover sudden, immediate costs like illness, home repairs, and travel. A healthy savings plan can also empower you to start your own business, provide for a child’s education, or ensure a comfortable retirement.
Here are some time-tested strategies to help turbo-boost your savings so you can best save for the future.
Keep your lifestyle in check with your paycheck.
Track your spending for a few months. Are you taking out (spending) more than you’re putting in (earning)? If so, you’ll need to get creative with a stricter budget. Try your local library’s DVD collection instead of costly entertainment bills. Use store brand products instead of pricier brand name options. Consider buying used, from cars to clothing, rather than defaulting to buying new. After a few weeks, it’ll be easier and easier to get into this thrift-first mindset. And your savings will keep pace as well.
It’s totally natural to want to accept every invitation that comes our way. After all, humans are social creatures, and who doesn’t love spending time with friends? But when saving for the future is a priority, you can suggest free or low-cost group activities like hiking, free museums, and home-cooked meals.
Flush “bad” debt down the drain.
Not all debt is bad. Think of “good” debt as an investment, like paying for education. This kind of debt typically has very low interest rates, and consistent payments can help build your credit. But debt accompanied by high interest rates, often associated with credit cards, can quickly compound and get out of hand. This is “bad” debt. You’ll want to pay it off as soon as possible to stop it from eating into your potential savings.
Paying off your credit cards goes a long way in saving for your future, because you’re no longer at the mercy of compounding interest. (If you keep a credit card but pay the balance in full every month, this won’t be an issue for you.) And after all, wouldn’t you rather be funding your future instead of paying interest on a meal you ate 6 months ago?
Automate your savings.
Making a habit out of savings can be a little painful at first. That’s why it can be helpful to automate your savings. Set up a bi-weekly transfer to put a consistent amount of money from your paycheck into your savings account. The sooner it’s in your savings, the less likely you’ll miss it.
Dvdendo takes the pain out of saving by making it automatic every time you spend. Just link a debit or credit card to your account and we’ll round up each of your purchases to the nearest dollar and deposit those extra pennies (we call them DV’s!) in your investment account.