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The recession has been a great equalizer, hitting bank balances hard across the world from the top of the pecking order all the way down to the bottom. If you’re savvy, you will have realized that with so many jobs becoming redundant, the cost of living on the rise and salaries frozen, that it’s more important than ever to build up savings. In these fast times, many people don’t know where to begin with saving other than starting up a saving account with HSBC or another established bank. This guide will give you a few tips to get you on your way to financial security through savings.
Saving isn’t complicated, but it does require a lot of willpower, so be sure you are creating paths to success. One way you can do this is to ensure that the account you are saving to is a specialized saving account. Saving accounts usually allow you to make minimal withdrawals through the year and provide a higher rate of interest, ensuring your savings are kept out of reach.
Now set up a standing order, or auto-draft, to automatically take a set amount of your salary and transfer it to your saving account every month. Consider this like any other bill. This will stop you from feeling tempted to spend it rather than put it aside for a rainy day.
Remember your pennies and cents: many people forget that small amounts of money quickly add up into large amounts. Emptying all the change from your pockets into a jar at the end of the week is a great way to build savings. If you don’t think you’ll manage to put all your change in the jar, start by putting pennies and small change in and build from there. Once the jar is full, take it your bank and deposit it into your saving account.
For those lucky enough to receive bonuses from your employer, it can be easy to quickly fritter it away on novelty or entertainment items, but before you do consider how much more that bonus could do for you collecting interest in your savings account. As a bonus is in addition to your regular pay you are not going to miss it if it goes straight into your saving account, so be financially smart and bank it.
If you remember these simple tips, you’ll soon be on your way to a healthy nest-egg.
Do you have any tricks that you use to funnel more money into savings?
I use your end of the week change suggestion with my checking account. Every payday whatever is leftover in the checking account gets invested. It keeps me from seeing a large amount of easily spendable money. I like the idea of thinking of your savings like a monthly bill too.
K @ Get Worth recently posted..Money Rule to Live By
I should probably adopt a strategy like that. I’ve been letting money build up in my account a bit trying to decide whether I should pay off the balance on my 0% balance transfer or just invest it. I just wish my job was more stable to be able to clear my account every other week.
another good way to save is to set up an automatic transfer to account that is not easily accessible. I women I counseld with set up an account at a credit union. We learned from her financial behavior that online would still be easily accessible even if it did take 2 to 3 days for the money to transfer back to her checking account. A credit union is not easy to find as there are not that many establishments. For her to access money from her saving account she would have to drive 15 to 20 minutes. Having to drive rather than submitting a transfer in less than 1 minute was effective for her to think twice before withdrawing cash from her savings. Everyone is different…it may not work for some, but it does work for others
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Interesting strategy to make her money a little less accessible. I have automatic transfers going into my retirement savings account. Technically I could access it easily, but since it’s considered retirement savings, it would feel so wrong to withdraw from there unless absolutely necessary.
I have been a change hoarder for years – quite strong in my early 20s, then I tapered off, and then more active in the past few years. I am always amazed at how much one can accumulate at the end of the week or the month by putting your change in a jar. Of course it adds up more quickly in Canada with our toonies and loonies.
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I used to hoard change, but then my ex would always use the change for me…so thoughtful of her lol. It kinda let me to use my credit card more to avoid getting change. Well I also wanted the cash back rebates. Now that I’m single it’s building back up again.
Next time I get my bonus, it’s going straight to my investment account
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Good plan. Those bonuses are the easiest ones to just invest. It’s often forgotten about with no real plan of where it would otherwise go. Of course it can be tempting to treat it as an excuse to go shopping.
My big thing is automated savings. Money goes into RRSP and TFSA automatically everything month. And some comes off my paycheck (Employee stock plan) before I even get it. That makes sure I put it away!
mycancukbuck recently posted..8 quick and easy ways to save on groceries
This is what I have to do as well. If it wasn’t automatically coming out, I would just forget to make contributions. Before you know it, I’d find somewhere else to spend that money. I would in the past anyway. Now my cheap side has taken over.
I personally pay myself first out of each paycheck and then only spend what is left or less. Works wonders for me and I even did a post about it on my blog!
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I don’t do this out of my paycheck but I do have bi-monthly payments scheduled. I gotta stop leaving so much money in the bank though. I gotta stick to my post about emergency funds. It’s just tough when my job is a bit uncertain.
My only “trick” is to transfer what I can save each month on the first of the month when we get paid. That way it is safely in my savings account where I can forget about it and not spend it!
Doing the transfer right away is key so that you can’t change your mind later. I wouldn’t just use a savings account though. Get that money working for you in a good investment.
i used to pay myself first to an account that was not easily accessible. it was just gone and i never thought about it again. its suprising how you adjust to living on less once you start. every 6 months i would make an increase to the contribution and adjust to that. it was actually very useful with adjusting to the layoff since we had already spent 2 years prior living on significantly less.
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I guess lifestyle deflation also exists too then. We do tend to live off however much is in our bank accounts. If there is more money there it is very tempting to give in to extra spending.
We simply have a day towards the end of our budget where we “close it out” and basically bring our month’s budget down to $0. Whatever is there is typically what gets saved.
We also have a more automated approach for targeted savings for things such as Christmas, car repairs, taxes, etc.
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That is a great idea, Jason! I’m really going to start forecasting my budget and making it balance to 0 at the end of the month, instead of hoping it ends up close-ish. Yes, we finally read Dave Ramsey’s book to anyone that this sounds familiar!
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Doesn’t sound familiar to me. I don’t think I could bring myself to read his book lol. I do like the idea of closing out your account in addition to making the automatic payments. You just have to remember when automatic withdrawals come out so that you don’t get any overdraft charges.
In order to make sure I save, I pay all my bills out of my paycheck first, then put a predetermined amount into savings, and then the rest is for daily spending like groceries and entertainment. If I were to try to save after allocating money to those miscellaneous expenses, I’m afraid I’ll never save anything at all and just spend what’s in my checking account.
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I used to be all about spending what’s in my bank account, but I have to say I’ve gotten much better about it. All of this finance blog reading has really trigger my frugality and made me wary of spending too much on anything.
It is a great idea to set aside that money for savings each month. You may want to consider paying yourself before paying the bills. Doing this make you the number one priority, not the other people you pay every month.
That’s what I do. I have automated savings withdrawals that come out each month and I don’t even notice them. That way I’m sure to save some money every single month. I just need to get better at putting even more aside at the end of the month instead of leaving it in my main account.
Great tips on starting down the road of savings. I use many of them, like paying myself first and putting extra change in a jar. One thing my wife and I do is use the extra change for spending money when we go on vacation. We’re usually able to rack up a couple hundred dollars alone just by doing that,
That’s a good way to build up an extra vacation fund. It makes vacations a lot more affordable if the spending money is gradually added to throughout the year.
We use automatic transfers to move money to our various targeted savings accounts every payday. It’s worked well for us. I don’t even think about it anymore.
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Yep, I love automatic transfers. The money just disappears and you don’t even notice it other than your savings increasing more. You just get used to having less money each month.
Last year, my bank started charging a fee for checking, but it could be waived if you had a large enough direct deposit, had a sufficient minimum balance, or transferred at least $25 per month to a savings account.
I set up the transfer and included it into the budget and don’t think twice about it.
I hate when a bank wants a minimum balance. That’s when you start shopping around for a new bank account. One of my banks tried doing that. So I closed that account and stuck with the bank that waived the fees just for having multiple products with them.
I shopped around, but I couldn’t find any completely free checking accounts that had my one must-have feature: a fast way of depositing checks. One of my income streams that is specifically for my debt repayments comes on a pre-paid card. The cheapest way to get money off of it and into my account is to buy a money order from the grocery store and deposit it.
ING has FINALLY instituted remote deposit, but this was before then.
Interesting setup Edward. I’ve never heard of anyone having to do that. As for a free checking account, I don’t think banks advertise that, but it might be worth asking. I know with my bank I just had to have a set number of ‘products’ with them for fees to be waived.
I use the coins in a jar trick myself. You can get free paper tubes from the banks to roll up your coins and deposit them. The lack of savings is a major problem for many people our age.
I try to save my coins, but I find it a bit of a hassle to roll them and bring them into the bank. So I end up spending the bigger coins to delay that.
I always transfer money to my savings account at the start of the month – and I always transfer about $100 more than I think I should; that way, I’m forced to go “under budget” for the rest of the month on everything else!
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I like that aggressiveness. It’s way too easy to skimp on your savings contributions telling yourself that you need more cash on hand than you really do. That forced strict budgeting probably makes a huge different in your finances.