Saving money can be one of the most profitable financial habits to adopt. It has been proven to have several benefits. However, as much as it is essential to save, it is also essential to know how to maximize it.
We had an interview with a writer at Green Sprout, a financial blog, to get insights on how to maximize your savings. The details are as seen below;
HOW CAN YOU EFFECTIVELY SAVE MONEY FOR THE FUTURE?
The first step to effectively saving money for the future is to draw up a budget. This budget regulates how you spend your income and what percentage goes into your savings. You must have a budget and strictly follow it.
Next, you need to understand cash flow, how it works, and your spending habits. This will help you to be more intentional about making changes and saving.
In addition, you should try to understand the difference between a want and a need, and applying the knowledge to your spending habits will positively impact your attitude towards spending and saving.
Lastly, automate your spending. You can have a specific portion you wish to save deposited straight out of your paycheck. This will reduce the temptation of spending all your income, and you can accept the remainder as your income. Automated savings encourages healthy saving habit.
WHY IS IT IMPORTANT TO SAVE MONEY?
Financial security! Whether you are a one-person household or more, you must have a safety net to fall on in case of emergencies and even for future expenses. These include recession, education, health challenges, job loss, etc.
At Green Sprout, we believe saving some money will assist you in situations like this until you find better footing.
HOW DO YOU SAVE MONEY ON A TIGHT BUDGET?
Some practical ways to save money on a tight budget are; automating your savings, getting bank bonuses, using a budgeting app, taking stock of expenses, and taking advantage of student loan forgiveness.
HOW DO YOU MAXIMIZE YOUR SAVINGS?
You can search around for providers with great savings account offers. This will ensure that you are getting the best account for your money. Depending on the level of risk that you are comfortable with, there are many investment options that you can put your savings into for guaranteed returns. You can discuss your options with a financial adviser.
You can also go after government bonuses. An example is the Lifetime ISA which offers free government bonuses to people saving towards retirement or buying their first homes. It is available to persons between the ages of 18-39years.
Lastly, cultivate the habit of locking your savings away for more extended periods. This will reduce the spending temptation and attract higher interest rates. However, it is also important to direct a certain amount to an emergency account that is more easily accessible.
HOW MUCH SHOULD YOU SAVE MONTHLY?
This depends on the individual. It depends on your income, what you are saving for and how much you can afford to put aside. A common suggestion is 10% of your income, and you can use a bunch of budgeting apps to help.
This may, however, not be feasible for everyone. You should remember that any amount you put aside will definitely accumulate over time.