How to Grow Savings on Almost Any Income
It’s a common misconception that you need to earn a high salary to see any real growth in your savings. Fortunately, this is just not true. While higher earnings can aid in the speed at which your account grows, this is not the only factor involved in saving. In fact, even without a hefty paycheck every month, committed savers can steadily build a healthy nest egg. All it takes is a little preparation and willpower for anyone to see a solid return on their savings. Here’s how.
Choose Debit Over Credit
Paying high-interest credit card debt is the opposite of saving. With these types of accounts, you’re paying substantial amounts of interest to the credit card company, every single month. Try to pay down your credit card debt as soon as possible to rid yourself of these extra fees and get yourself out of the red.
Moving forward, endeavor to make as many of your purchases as possible with your debit card or with cash. By paying for things upfront with your own money rather than charging them to credit, you’re less likely to spend more than you should, allowing you to redirect funds that would have been used to pay of unnecessary debt into your savings account.
That said, having a credit card is important for building up a credit score, so instead of doing away with a credit card altogether, you should consider applying for a low-interest credit card. This card should then only be used when necessary, and you should commit to paying your bill in full each month so that you don’t rack up costly interest charges.
Looking for a credit card with low interest? Consider Citadel’s lowest rate card—the Choice Mastercard.Learn More
Set Up Automatic Savings
If your employer offers a 401(k) or similar retirement plan, sign up for it and contribute as much as you can. The payments come out of your paycheck automatically, so you don’t have to think about putting the money into savings manually. Additionally, your employer may match your contributions up to a certain percentage, meaning you’re actually saving double the amount you’re contributing.
You can also automate transfers from your checking account to your savings account each pay period. And if you get a raise, increase the amount you automatically put into savings. This isn’t a get rich quick scheme, but it’s definitely a way to get saving quickly. By setting up these transfers to happen automatically, you’ll never need to think about how much you can afford to put aside each month, and your savings will simply grow in the background. After all, it’s always best to spend what you have after saving than to save what you have after spending.
Examine Your Budget
Start on the path to saving by carefully examining your budget and seeing what you might cut. If you don’t already have a strict budget, it’s important to put one together. Once you have your budget, assess what you can cut out and put that amount into savings instead of spending it. For example, consider making more meals at home rather than buying takeout. If you save $20 a week on your food budget, that extra money goes into savings, and over the course of a year you’ll save $1,040 on your food budget alone. By aligning your budget with your earnings, you ensure that you are always living within your means and not spending money you simply do not have.
When you’ve saved a nest egg of a few thousand dollars, consider investing it. Investments can be a passive way to grow your money, and when managed with the help of a financial advisor, the effort can be truly minimal on your part. How much you invest and what you invest in are decisions that require a conversation, so having a little help to ensure you are investing wisely is a smart move. The best part is you don’t need to have a lot of money to start investing, so no matter your income, this can be a viable way to start saving.
Growing a healthy nest egg isn’t just an option for those with a sizeable income. Everyone, regardless of the number of zeros on their paycheck, can start building their savings. All it takes is commitment, a little self-control and a few minor lifestyle adjustments.
Consider Citadel’s FREE Checking Account to start managing your money—it’s a checking account that’s actually FREE, with no minimum balance. Eventually, you can build your nest egg enough to open a Citadel Certificate or High Yield Savings Account.