Finding ways to save can be a challenge – especially in today’s economic climate. While all of us have good intentions, it can often seem like there’s little left after paying the bills, mortgage and other obligations. But the important thing to remember is that saving a little over time can really add up.
Whether you’re saving for a down payment on a house, your dream vacation, retirement or just for a rainy day, no amount is too small. Consider this – simply setting aside $50 every month, you will save an extra $600 a year.
Here are some proven strategies to help you prepare for the future.
Take advantage of automatic transfers
Work with your financial institution to have a portion of your pay automatically deposited to your savings account. Automatically transferring this money has two key advantages:
- It happens automatically so you don’t have to worry about it.
- By moving it directly into your savings account you won’t be tempted to spend it first.
Save your change
Collecting your spare change can result in some large savings. Identify a spot to collect your spare change and begin to diligently collect your coins. You’ll be surprised when you add it all up at the end of the year.
Also, some banks now offer automatic savings programs that make it even easier to save. For example, MidWestOne’s, Bank Your Change program is an automatic savings program for your check card. Every time you make a purchase with your MidWestOne Check Card™, the amount is rounded up to the next whole dollar and the difference is automatically deposited into your savings account.
Save your next raise
Got a raise – congratulations! Now, instead of spending the extra money, save it instead. Take the difference in pay and automatically transfer it into your savings account every month. The main reason why this technique works so well is that you’re already adjusted to your old income.
Remember the power of compound interest
When saving for retirement, compound interest is especially important. Compound interest refers to interest you earn not only on the money you originally invested, but also on any interest the investment has already earned. Consider this -if you save $100 per month starting at age 20 (with an interest rate of 8 percent) your savings will total nearly $530,000 at age 65.
Save your tax refund
If you’re expecting a tax refund this year, make it a goal to save it. Why? Tax filing season presents a unique opportunity each year for us to save more than we normally would. So whether you deposit it directly into your savings account, or make a larger contribution into your 401(k) – saving your tax refund can have a big impact on your overall savings.