Ensuring that you have enough money left over for saving—then following through with your savings plan—isn’t always easy. From pop-up expenses that deplete your cash reserves to hidden fees and rising prices, the challenges of saving keep many individuals from reaching their financial goals.
However, there are things you can do to not only ensure you have room in your budget for savings, but also simplify the process and maximize your returns. In this post we’ll offer our best tips for how to save more money, whether you're saving for a rainy day or for a long-term goal.
1. Create a Budget
One of the most helpful things you can do to increase your savings potential is to create and follow a budget. Creating a budget allows you to highlight areas of overspending and devise a plan to address them, thus allowing you to earmark funds just for savings. Understanding your spending patterns also helps you know how much money will be available for savings, so you can set up regular transfers or deposits to your savings account without worrying about shortfalls or overdrafts. We’ll touch on all these things below.
To create a budget, you can scrutinize your account statements and tally up expenditures by hand, add them to a spreadsheet that you update regularly, or automate the process by using a budgeting tool like our Money Tracker Tool. Money Tracker not only helps you create a budget, it also allows you to monitor your cash flow and set savings goals, and can even incorporate external accounts for a better picture of your financial situation. You can access Money Tracker through our WSB Touch App.
2. Make Savings Part of Your Budget
Many financial experts advise “paying yourself first”, making sure you are putting money aside for savings before you spend on other things—particularly discretionary items (wants). By including your savings as a designated part of your budget, rather than just saving whatever is left over, you are giving a priority to your financial wellbeing.
One popular budgeting method—the 50/30/20 method—provides general parameters for how to allocate your income. Following these guidelines, you would set aside about 50% of your income for needs, 30% for wants, and 20% for savings. When your budget is tighter, simply adjust the percentages, starting by reducing wants.
3. Get Rewarded for Purchases
You can give your savings a boost by directing your cashback from credit card or debit card purchases into your savings account. This is an especially useful trick if you put most of your everyday purchases and expenses on your card. For instance, with our Cash Rewards Platinum Personal Credit Card, you can get 1% cash back on all net purchases, no annual fee, and a 0% introductory rate.
Rewards cards can also be used to pay for discretionary spending, like travel, to help you reduce costs and stick to a budget. Our Rewards Platinum Card lets you earn one point per dollar on net purchases and redeem them for merchandise, rental cars, travel and more. Our debit cards also come with rewards—1 point for every $4 spent, to be used for travel, merchandise, or even gift cards. Visit our- Credit Cards or Debit Cards Rewards pages for more information.
4. Automate Your Savings
Once you have a budget in place and you know how much you can (or should!) save each month, the easiest way to ensure you actually save those funds is to automate it. There are a few ways to do this:
- With your employer, have a percentage of your paycheck be directly deposited into your savings account.
- Set up weekly or monthly automatic transfers from your checking account to your savings account.
- Take advantage of any savings plans (like 401(k)s and HSAs offered by your employer that deduct (and maybe match!) a certain percentage of your pay for goals including retirement and healthcare costs.
5. Set Savings Goals and Pick the Right Tools for Them
Simply setting aside a portion of your income for a rainy-day fund might not feel particularly motivating—but saving for specific, attainable goals can help incentivize you to stick to your plan. And when you highlight goals to save for, you can also select the tools that will work best to help you achieve those goals, maximizing interest, as well as potential tax savings.
Every savings strategy should contain both short- and long-term goals, as well as an emergency savings fund. Here are some potential goals to save for, paired with financial products that can help facilitate your savings.
Holiday shopping: Christmas Club Accounts, are specifically designed to help you save throughout the year, offering competitive interest.
Vacations and Travel: You may not know that you can also use a Christmas Club Account for other occasional purchases, including annual travel plans. If you travel a lot, a Rewards Credit Card can be a great way to earn flights or hotel stays.
Cars, luxury items, home renovations, and new appliances: Your best bet is to use an account like our Steady Saver, automatically transferring a budgeted amount each month, to help save for large ticket items that you plan on purchasing in the next year or so. You may also consider a money market account, which offers competitive interest paired with direct payment options (like checks or debit cards), making it easy to pay for items when the time comes.
Major life events: As with large ticket items above, use a savings account or money market account to save for an upcoming wedding or down payment for a house.
Retirement: Using retirement-specific plans, like an Individual Retirement Account (IRA) offers significant tax benefits as well as excellent returns on your investment dollars.
Building Wealth: Meeting with an investment management expert, who can customize a portfolio of stocks, bonds, and mutual funds, is one of the best ways to get started building your wealth.
Buying a second home, starting a business, and other long-term goals: For long-term goals, choosing a savings vehicle with higher interest can really let you take advantage of compounding interest. Consider using certificates of deposit or high-yield Money Market Savings Accounts (or both!). Use our savings calculator to help you determine when you'll reach our savings goals.
Having money set aside can help you in a financial pinch and can prevent you from having to take out loans. Use a savings account or money market account for general emergency expenses. If you have a high-deductible health insurance plan, you can setup and contribute to a Health Savings Account (HSA) for emergency medical expenses.
No matter what your goal, don’t forget that you can set it and follow your progress using our Money Tracker Tool.
Explore Your Savings Options with West Shore Bank
From Personal Savings Accounts to Wealth Planning, we have the products and services to make saving simple, maximize returns, and meet both your short and long-term financial goals.