Earning money to save for all of your future financial needs is a challenge for almost everyone. But once you start out on the path towards financial security, there are some things you can do to ensure that your savings grow as quickly as possible. Particularly, the following three strategies are easy to implement, though they could make a big difference in your finances over time.
1. Don't Settle for No-interest Savings
Over the past several years, many savers have gotten used to getting next to nothing in interest on their savings. Banks routinely set rates on interest-bearing accounts at 0.01%, and that crushed savers who relied on those interest payments for income to pay current bills.
Some people turned to longer-term investments in order to get the income they needed. As it turned out, investing in dividend stocks, long-maturity bonds, and real estate investment trusts back in the late 2000s following the financial crisis turned out to be a profitable move, but it's likely that many savers did so without fully understanding the risks involved.
Even if you need to keep your money absolutely liquid, the recent rises in interest rates have made it possible to find online savings options that pay as much as 2%. That's still quite a bit less than what savers were used to getting prior to the financial crisis, but there's no reason to let stingy banks keep paying you next to nothing and hold on to the interest that should rightfully go to you.
2. Get Rid of Bank Fees
Another big hit to savers has come from banks looking for revenue from fees. Everything from charging you to withdraw money at an ATM to imposing fees for lack of activity can take away months' or even years' worth of interest in one fell swoop.
It's easier now to find banks that will minimize fees than it was in the past. Many online banks will offer you credits against fees that other institutions charge for using their ATMs, essentially reimbursing you for any money taken out of your account to pay those charges. Inactivity fees are easy to avoid just by doing a transaction occasionally, and not all banks charge them as frequently or in such large amounts. If you're losing money to bank fees, it's worth it to look and see whether you could do better elsewhere.
3. Set Unexpected Windfalls Aside
When you're on a tight budget, it can be hard to find even another $5 a month to save. That's why it often makes more sense to look at one-time windfalls as the best potential sources for savings. For example, at this time of year, many people look forward to getting sizable tax refunds. Although it's tempting to use your refund to break your budget and take care of pent-up spending wishes, putting as much of your refund as you can toward savings can get you to your goals a lot faster than just relying on whatever you set aside from your monthly budget.
Tax refunds aren't the only things you can use to boost your savings. Work bonuses, insurance policy dividends, or even garage sale proceeds feel like found money. It won't cause much pain to save money that you never expected to get, and the benefits are substantial later on.
If you follow these three simple ways, you will reach the financial goal that you set for yourself in the long run.