7 Money-Saving Hacks to Help Keep Your Finances on Track.
Money is something that everyone wants, and nearly everyone needs. However, with inflation still standing at a high level — and many fearing a recession is on the horizon — people are trying to figure out how to save their money.
While it may look daunting and scary initially, setting out a plan to save money is simple and easy— the first step is figuring out where to start.
To help you on your money-saving journey, here are seven financial hacks to help you keep your bank account on track.
1. The 50/30/20 Rule
The 50/30/20 rule is a well-known money-saving trick that many people use to split their expenses and spend only a certain amount on different categories of purchases.
Each number in the title consists of a percentage of your income tailored to an area of spending. All three combined numbers equal 100%, so you should not fear exceeding your limit if you follow it correctly.
For purchases that fall into the 50% category, these expenses must be noticed and are essential to pay on time. These purchases include rent, car, student loans, utilities, and health care payments. Groceries and life insurance also fall into this category.
To go a step lower, purchases that fall into the 30% category are purchases you want but do not necessarily need. This could consist of buying clothes, dining out, going out for fun, paying for streaming services, or treating yourself to self-care.
The lowest step involves the money you save for future occurrences, and it only takes 20% of your income. These payments can consist of an emergency fund, 401(k) payments, retirement account, extra payments on credit cards or student loans, and other investments you may have.
With this mathematical trick, you can better grasp how your money is spent and where it will go.
2. Find a Good Savings Account
A savings account is a bank account that everyone should have to store leftover money in case an emergency happens in the future. This account is separate from your checking account and can be helpful when needed.
Unlike checking accounts, savings accounts collect interest over time and can grow yearly. While each bank offers a savings account to its clients, each one is unique and provides a different APY (Annual Percentage Yield).
Most savings accounts only offer 1% APY, but others provide way higher — which is what you want to look for. Some banks offer over 4% APY for their savings accounts, which is way bigger than 1%. You should try finding a savings account that offers at least 3% APY.
Savings accounts are a great way to store money and have it grow over time when you are not using it. You should ensure you have more money in your savings than your checking account so that when you withdraw from it, it will be bigger than when it was put in.
3. Set Up Automatic Transfers
It is always okay to start saving; the sooner you do it, the more your money will grow in the future and long run.
One way to start saving — without the danger of forgetting to do it — is to automatically transfer a set amount of money that will go from your checking account to your savings account.
Doing this will ensure that you always remember to add money to your savings, and most banks allow you to set the date and time you want to transfer the money.
Another tip would be to set it for the day before you get your paycheck — if possible. This will allow you to look at your bank account and remember that the savings amount has already been transferred, and you do not need to deduct any more from your account.
4. Check Monthly Subscriptions
In the age of monthly subscriptions, trying to figure out where all your money is going every month may get out of hand. No longer are the days of one flat fee; every company has some reoccurring subscription servicer, and you may be stuck in the middle.
Looking at your monthly bank statements is an excellent start to getting an overall view of where your money is going each month. Highlight each subscription and note how much you are paying towards them.
Once you have compiled all your subscriptions together, look at which ones cost the most and which ones you frequently use compared to those you don’t. You have two options for those you don’t use as often — or slightly ever — cut it back or out.
Cutting it back would entail seeing if the provider offers a cheaper subscription plan. This may result in ads being included during your viewing experience or lower-quality resolution being presented, but you can still access the content you enjoyed before.
Cutting it out means precisely what it sounds like — you cut the streaming service out of your budget and cancel your subscription. If you do not use the streaming service anymore or barely use it, you shouldn’t waste your money on it.
The good thing is that if you cancel and find yourself wanting the content the service provided again, you can always resubscribe at any time.
5. Pay Off High-Interest Debt
Having debt is not uncommon among many people, and everyone has different financial situations that put them into it. While debt is the same, no matter how you look at it, other loans may have different interest rates.
Make sure to take a look at which loans and accounts have the highest interest rate connected to them and put those as a priority first on paying off. While you will still get hit with interest charges by your other loans and accounts, it won’t be as bad as the bills with high rates.
Start big and then trickle down on which accounts have the highest interest connected to them. Better to be hit with lower interest payments than bigger ones.
6. Lower Your Student Loan Payments
While this may not be an issue for everyone, many still pay off their student loans years after graduation.
The cycle of being given your statement and then paying it seems like an ongoing cycle that will never end, but there are many ways to lower your monthly payments and have the cycle end quicker. One way to lower your repayments would be enrolling in income-driven payments that will tie your expenses to the number of your earnings and set them at a manageable level.
Other ways would be trying to refinance your loan payments, enrolling in an autopay option so you receive a discount, or paying more towards your loan and making extra payments to lower the chance of being hit by an interest charge. Doing that will also result in your debt being paid off faster.
7. Track Spending and Set Savings Goals
The best way to stay on top of your spending and saving techniques is to track what you are buying and see the trends in your spending habits. Looking at your past statement and bills is a great way to start and achieve this goal and move towards a healthier financial relationship.
Ensure you know what income you have coming in and what expenses you will have going out. This will help you understand your cycle of monthly spending and help you figure out and plan your next budget plan. Once you know your spending cycle, you can set realistic savings goal(s) for yourself. This may include paying down your debt or putting more money into a savings account for future use.
Also, utilize saving goal calculators to help get a sense of what you should spend each month and what you should save simultaneously. These goals are to help you have a brighter financial future, and when you complete them, you will come out more financially stable than you did when you started them. Saving money may seem like a hassle and a daunting thought of not being able to live as comfortably as you want to, but once you know what your finances look like and take action amongst them, it will all be worth-the-while.