Some experts recommend that individuals boost their savings contributions gradually, making for a savings surplus large enough to cover unforeseen expenses and pitfalls. There are a variety of methods you can use to grow your savings but how you do it depends on your financial preference.
1. Put your extra income and gifts into savings
One way to build a decent nest egg is to periodically increase your contribution amounts. You can do this in a variety of ways. For instance, you can increase your contributions by $50 more every three months. However, if you cannot afford to continually increase the increments of your contributions, you can do something less extreme, such as saving one-time gifts, bonuses, or tax refunds.
2. Find areas you can cut back on
Another simple way of boosting your savings is to cut back on utilities or downsize your lifestyle to lower your monthly bills, freeing up money that you can save.
If you have a 401(k), you may have access to an automatic escalation program, which can allow you to schedule an increase in your savings annually, by a pre-fixed amount. Or, if you have your own savings or checking account, you can set up auto deposit to transfer money right after you’re paid.
Instead of upping your contributions every few months, increase your saving threshold each time you receive a raise.
5. Pay your savings like you’re paying off debt
What a great feeling it is to finally pay off debt — the thought of finally being done with paying student loans, a mortgage, or a car loan may be more than you can handle! Once you’ve accomplished paying off all your outstanding balances, start paying yourself as though you’re still putting money towards your debts.
6. Prioritize saving over secondary needs
Pay yourself first. Before spending all that hard-earned cash on shopping or nights out, put your designated amount in your savings account first. Many people try to find savings at the end of the month when they’ve already spent the majority of their take home pay, but by prioritizing your untouchable nest egg first, you can have stability when you need extra money in the case of an unfortunate layoff or large expense.
7. Job seek with benefits in mind
When you feel you’re ready to move on to greener pastures, begin your job hunt with decent benefits in mind. Employers that offer appealing benefits, like health insurance, transportation reimbursement, and matching retirement savings plans can ease the burden of expensive transit and health expenses, and help you grow your savings.
It can feel like a paradox seeing a pile of money grow and grow until it’s so large, you don’t know why you’ve been leaving it untouched.
However, life’s curve balls tend to be expensive, and for your own health and peace of mind, having a good store of money to use when the going gets rough can get you through difficult situations. As long as you’re responsible with your income, you can do yourself a favor in the future, while still enjoying the present.