When you look at the rate of inflation and the cost of goods right now, it can be a little worrisome. Although things are improving from a year or so ago, there are still a lot of high-cost necessities that make your money work harder to afford them. This can cause a lot of stress and put pressure on your bank account.
Saving money is crucial if you want to maintain a certain quality of life and a comfortable retirement in the future. With numerous bills and various sources of debt, it can be challenging to build up your savings over time to prepare for your later years or even emergencies.
If you want to increase your savings, then you will have to make some important decisions now. Let’s discuss some financial tips to help you start saving more money.
Switch to a High-Yield Savings Account
When you put your money into a savings account, there is usually a small interest rate that will result in a growing balance even if you are not contributing anything. Most savings accounts have a very low interest rate, so even if you have thousands of dollars in the account, the yield will be very low.
High-yield savings accounts contribute to financial wellness by helping your balance grow faster. The annual percentage yield rate, or APY, is typically higher to help protect against inflation. Though the standards for opening a high-yield savings account are stricter, the benefits are worth the cost if you have enough of an opening balance to do so.
Pay Down the Principal on Your Home Loan
In many cases, you have to spend money to make money. This is the entire premise behind investing, which is a strategy used to increase your income. If you own a home and took out a mortgage to purchase it, then you can take advantage of this investment to save money.
Every month, you pay toward the interest and principal amount on the loan balance. However, if you make additional payments on the principal, then you can shorten the amount of time you are paying the loan and lessen the total interest cost of the home. Plus, you will build equity faster which will benefit you if you refinance or sell the home.
Invest in Rental Properties
Real estate can be an incredibly lucrative investment strategy. Many of the richest individuals in the world built much of their fortunes on real estate portfolios. Though you may never become a millionaire, this does not mean you won’t significantly increase your savings account by investing in rental properties.
You will need some cash saved to purchase a property, and you should also consider mortgage rates for investment property expenses, which are usually a little higher than owner-occupied homes. However, if you can obtain the property and fill it with tenants, the revenue stream can have a big impact on your income.
Monitor Your Financial Accounts
When you have a lot of bills and payments that are due each month, it can be tough to keep track of them in your head. Sometimes, you could be paying for services that you no longer use, especially with the amount of subscription services that exist.
Often, the only way to determine what you are paying for is to consistently monitor your financial accounts. That includes bank accounts, credit card statements, and even an escrow account. When you check these things frequently, you can quickly spot any wasteful or unwanted spending that is cutting into your savings.
Pick Up a Side Hustle
The side hustle economy is booming in 2023. Since many jobs can be done from a computer or laptop anywhere with a Wi-Fi connection, many entrepreneurs are taking on small jobs to earn additional income. If you have the time, you could do freelance work such as content writing, data entry, personal assistants, product testers, and more.
Many companies are looking to hire freelancers because they are cheaper, so they can become a simple side hustle that takes up little of your time but still produces more income to add to your savings.
Small Changes Now Can Mean Big Savings Later
When making financial decisions, we often have a shortsighted perspective. We think that a certain change will only save a few bucks a month, so it is not really worth doing. However, the benefits of small savings compound with time. A few bucks a month could mean hundreds of dollars in a few years. Make several decisions that have similar results and the difference is thousands of dollars in your pocket.
The steps listed above range from cutting a few dollars from your spending to investing in a real estate property, but they are all able to increase your savings at different levels depending on your current financial situation.