Putting away a little money each month is always wise. But giving your balance a meaningful lift can be a strong motivator.
Below are eight tactics to help grow your savings.
4 Ways to Revitalize Your Short-Term Savings
Prepare your savings account for any major purchases on the near horizon.
1. Try the Pantry Challenge
Make an inventory of all the food in your home. Rather than letting cheese spoil or canned goods sit unused, list the meals you can create from what’s already in your kitchen.
Then skip your next grocery run and see how long you can stretch your current supplies. That’s the idea behind the pantry challenge. Put the money you would’ve spent on groceries into your savings instead.
2. Take Stock of Your Closets and Drawers
It’s easy to overlook a pair of shoes hidden in the back of the closet or jeans tucked away in a drawer. Cataloging what you already own can help curb impulse purchases when you realize you’ve got several items just like it at home.
Again, the money you don’t spend can be redirected straight to savings.
If you find something in good condition that you’ll never wear or use again, sell it online to give your account an extra bump.
3. Do a No-Spend Month
No-spend streaks can be intense — especially attempting 30 days without buying anything beyond necessities. Still, it’s an effective method to substantially grow your savings.
One perk of doing this in spring is the nicer weather, which makes free outdoor activities appealing, like hiking or picnics. Use ideas for at-home date nights and fun things to do with kids at home as inspiration during your spending freeze.
4. Pay Yourself First
Regularly setting money aside each pay period will produce steady savings growth. If you’ve had trouble stashing cash after covering bills and other expenses, it’s time to change the approach.
Rather than saving what’s left, flip the order and pay yourself first — even before paying bills. Ask HR to split your direct deposit so a portion of your paycheck goes straight into savings, or set an automatic transfer from checking to savings whenever you’re paid.
Watch your short-term savings grow with minimal effort.
4 Ways to Refresh Your Long-Term Savings
Plant the foundations for savings that will help you achieve long-range goals.
1. Revisit Your Sinking Funds
Longer-term goals can be tough to manage. You need consistency and focus when saving for something a year or more away.
If you’ve let your sinking funds — a personal finance term for the dedicated pool of money you add to — fall by the wayside, now’s the time to revive them.
Review your plans. Do you need to ramp up how much you’re saving monthly? What expenses can you trim to make that possible? Can you adjust the deadline for your goal or the total amount you initially targeted?
If you’ve been dipping into savings for unrelated purchases, consider opening multiple savings accounts and assigning each to a specific objective.
2. Check If You Have Enough to Weather a Crisis
You plan for sunny days, but are you ready for the unexpected financial storms life can bring?
Financial professionals often suggest keeping three to six months’ worth of living expenses in an emergency fund. Accumulating that amount can be a long-term endeavor.
If that feels daunting, begin with a smaller target. A recent economic analysis recommends around $2,500 for lower-income households.
Decide what you can comfortably contribute each month to reach that starting point, then build up toward a six-month cushion. As with sinking funds, keep your emergency money in an account you’re unlikely to touch for everyday expenses.
3. Make Sure Your Interest Rates Work for You
Simply put, not all savings accounts are created equal. While the average savings account rate is under 1%, some high-yield savings accounts offer rates above 2%.
That difference might seem modest, but it becomes noticeable if you leave your funds untouched for a long period.
A money market account is another solid option when you want relatively easy access to cash without the withdrawal penalties you might face with a certificate of deposit or tapping your retirement plan. Money market interest rates are often comparable to high-yield savings accounts.
4. Boost Your Retirement Contributions
Even if retirement is many years away, increasing savings now can pay off thanks to compound interest.
If you recently earned a raise or promotion, boosting retirement contributions instead of increasing spending is a savvy financial move. Even without a pay bump, try adding a modest amount to retirement — an extra $50 a month can compound nicely over many years.
Nicole Dawson is a senior writer at Savinly.
