The US economy, by any yardstick, is the strongest it has ever been in a very long time and Americans are making more money than they did in the past couple of decades. Data from the Council of Economic Advisers (CEA) shows that since December 2017, the disposable income of the average American household has increased by $5,205.
Which means if you have been planning to boost your savings so that you have something to fall back on for a rainy day, now would be a great time to do so.
Given here are seven easy-to-follow personal finance tips that can help you boost your savings.
1. Save First, Spend Later
One of the fundamental mistakes that people tend to make when it comes to saving money is that they pay all their bills first, and then try to save what is left in their account by the end of the month. In most cases, they do not have anything left in the account by the end of the month, so they do not save anything.
Instead, make it a habit to pay yourself first, before you pay your bills (but make sure you pay your bills and if you have to stop going out to eat as much then you should do that which will be emphasized more later). This way, your savings are assured to grow on a monthly basis, which can go a long way in building a financial safety net for you in the long run.
2. Follow the 24-Hour Rule
One of the most effective ways to reduce your expenditure is to follow the 24-hour rule. Nearly 85% of Americans say that they tend to make impulse purchases from time to time. Nearly 20% of Americans say that they have spent more than $1,000 on impulse purchases at least once.
In order to make sure that you only buy what you need, follow the 24-hour rule. Whenever you want to purchase something, do not rush to the store or go to amazon.com immediately. Instead, sleep over the decision for 24 hours. The next day, if you still think it is worth spending your money on, go ahead and buy it.
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3. Automate Your Savings
Let’s face it – not everyone has the discipline to save money on a weekly or monthly basis. Some people are like the state of California and the city of Chicago and San Francisco! You have to break apart from these bad habits.
From time to time, we tend to spend more than we should, which leaves us with nothing to save. To avoid this from happening, you can automate the process of saving money. Set up a recurring transfer service so that a certain amount of money gets automatically transferred from your checking account to your savings account – month after month.
4. Cook Your Meals at Home
The Bureau of Labor Statistics reports that the average American household spends more than $3,000 on eating out every year. It is a colossal waste of your hard-earned money, since you can cook your own meals at a fraction of the cost and watch a movie or a show at the same time or still the same converse happily with your family.
If you are too busy to cook every day, you can follow the ‘freezer cooking’ strategy. You can cook your meals whenever you have time, put them in the freezer, and reheat and eat it whenever you want. It does not, however, mean that you should stop eating out altogether. Just save it for the weekends and special occasions!
5. Goodbye Cable TV, Hello Online Streaming
The average American household spends as much as $100 on cable TV every month. Instead of wasting money on cable, you can subscribe to Netflix, Amazon Prime, or Hulu, each of which will only cost you around $10 a month (and still watch Transformers and Sicario via Redbox!). Not only can you save a lot of money, but you also get to watch excellent shows like Narcos via those methods. You can watch Better Call Saul, Bosch, and Ray Donovan via the internet (it’s really difficult to live now without the internet).
6. Rent It Out
If you own a house, you can earn some money on the side by renting out a portion of it. If you are not exactly thrilled with the idea of letting a complete stranger live in your home, you can rent out storage space for individuals and businesses. Either way, the money you earn can help you pay off your mortgage faster and save more in the long term.
7. Increase Your Contributions to Your Retirement Account
Many employers tend to match a certain percentage of their employees’ contributions to their retirement accounts. If your employer does the same, make sure you take full advantage of it by maximizing your contributions to the extent possible. The more you contribute, the more your employer will contribute – up to a certain extent. So, it is essentially free money which can boost your retirement savings considerably in the long run.