Saving Money / Savings Advice
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If your savings account is looking slim, or non-existent, you’re certainly not alone. It’s been reported that roughly 50% of people have less than three month’s worth of emergency savings, and a recent GOBankingRates survey found that a staggering 40% of women have less than $100 in their savings accounts.
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While the ability to save money sometimes depends on factors outside of your control, we spoke to several experts who offered a playbook on how people with healthy savings accounts make it happen.
Set a Monthly Budget and Stick to It
While budgeting may sound like the obvious answer, it’s because it works, according to David Frederick, director of client success and advice at First Bank. According to Frederick, an effective budget is your best tracking tool for how much an individual or household brings in, how much it spends, and how much it can save.
“Spending is the variable people can control most easily,” he said.
Check Out: 7 Fastest Ways To Save $20k, According to Experts
Use Advanced Savings Tools
If the only tool you use to save is a savings account, you may be missing out on earning potential, Frederick warned.
“While it is fine to sock money away into a savings account, there are often better accounts for long-term savings purposes. Individuals concerned about retirement should be saving into a 401(k) or an IRA. Individuals concerned about healthcare costs should explore saving into a health savings account (HSA). Individuals saving for children’s education should consider opening a 529 Savings Account.”
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Avoid and Mitigate Debt
One of the most effective ways to increase savings is to decrease debt, Frederick suggested. Though some debt is hard to avoid, from mortgages to student loans, he urged people to pay down these debts as quickly and purposefully as possible.
“Moreover, harmful debts like credit card balances and payday loans should be avoided whenever possible,” Frederick said.
Learn: 19 Effective Ways To Tackle Your Budget
Reduce Lifestyle Inflation
As we make more money, we have the tendency to spend more money, a concept called “lifestyle inflation,” said Jeff Mains, CEO of Champion Leadership Group LLC, which helps entrepreneurs scale their businesses. This eats into any money we could put towards savings.
Thus, you should make it your goal to live below your means, said Amanda Howerton, …….