If one of your goals for 2022 is to build your savings, it’s not too late to get started. Building a healthy savings pot is so important to help you achieve your financial goals, improve your financial health, cushion you from emergencies, and also make your money go further.
But it can be tough to build a savings pot when expenses are rising and you’re surrounded by marketing designed to get you to buy as much as possible.
So, here are some ways to build your savings in 2022.
Set short and long-term goals
You won’t hit your goals if you’re not clear on what they are. Most people have a vague idea of what they want to save for, but vague goals often fall flat.
Get specific and write down your long and short-term savings goals. This could be saving for:
- A new pair of shoes you’ve had your eye on
- A much-needed vacation
- House down payment
- Retirement accounts
- An emergency fund
Make a list of everything you want to do and start setting targets. “Saving for retirement” is a good goal, but “saving $50 per month in my retirement accounts” is a better one. That way you can take a specific action to meet a specific goal. Once your paycheck comes in, you know to put that $50 away into your retirement pot.
Reduce non-essential expenses
This is the tricky bit. We all have something on our bank statement that comes up over and over again that we could cut but never do. For you, it could be Uber Eats, a monthly subscription box, an online membership, or happy hour drinks every Tuesday.
Whatever it is, think of ways to reduce your non-essential expenses.
But be careful here. Don’t make the common mistake of cutting everything non-essential. It’s important to have balance in your budget and set aside some money for things that make you happy. Try going through your bank statements and highlight which are non-essential and then mark which ones you could live without easily. That’s a good starting place.
Automate your savings
If the reason you struggle with saving is that you forget to put money away each month, you could benefit from automating your savings.
Rather than waiting to see what’s left over from your paycheck at the end of the month, set up your savings accounts to automatically draw a set amount as soon as you get paid. That way, you don’t even have to think about it.
Do a no-spend challenge
A no-spend challenge might sound impossible, but don’t worry. It doesn’t mean skipping rent or going hungry. A no-spend challenge is usually a month where you decide to halt all non-essential spending.
This means you continue paying your rent/mortgage, bills, debts, food, and so on. But you stop spending money on clothes, alcohol, takeout, going out, vacations – anything you don’t absolutely need.
Turn it into a fun challenge with a friend and see how much you can do in your local area for free rather than relying on spending money. Any money you save at the end of the month can go into one of your savings pots.
Refinance your mortgage
If you have a mortgage, refinancing it to a lower interest rate could help you free up some cash from your monthly repayments. That’s extra money you could put towards your other savings pots. Be sure to shop around different lenders to find the best rate.
Find a way to increase your income
This is of course easier said than done, but the best way to increase your savings is to have more money to play around with in the first place.
You’ve got a few options here. You could focus on getting a promotion, switching to another company for better pay or trying a side hustle. Common ways people earn money on the side include freelancing (e.g. writing, graphic design, SEO, transcribing), setting up an Etsy store or renting out a room in your home.
Invest your savings
With many banks offering low-interest rates for basic savings accounts, many people turn to investing as a more lucrative alternative.
Investing your long-term savings is how most people grow their retirement funds because that money benefits from compound interest and growth in the market.
NOTE: Investing your savings puts your money at risk due to market fluctuations. Don’t invest your emergency fund or money you might need right away.
A good rule of thumb is to only invest what you can afford to lose and lock away those investments for at least five years to ride out the dips in the market.
There’s no real secret to saving more money. Making some small changes to your day-to-day life can free up money you could put to better use. The key is to be strategic about your spending and savings goals as well.
If there’s still not enough money in your savings account and you need a short-term emergency loan, get started with Jora Credit today.