Having trouble saving money? These strategies can help

The coronavirus pandemic put a strain on the personal finances of millions of Americans, particularly those who need to pay off debt, save for retirement and who have difficulty saving money. With continued economic uncertainty, it’s no surprise that many American men and women may be looking for more effective ways and simple tips to save money and safeguard their financial future.

Do you find it difficult to regularly save a portion of your income? You’re not alone. Thankfully, there are many diverse strategies and tips for saving money that you can use right now to save you money without putting any additional strain on your finances, including:

1. Making your savings automatic.
2. Opening a high-yield savings account.
3. Saving supplemental income.
4. Refinancing your debt.

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1. Make savings automatic (via direct deposit).

While manual deposits into your savings account can be effective, automated direct deposits have the potential to increase your balance with more consistency. Set up a portion of your paycheck to be automatically deposited into your savings account during every pay period to work toward financial success.

This effortless savings strategy through digital banking is one of the easiest ways to save, and ensures that you’re saving a predetermined amount regularly and prevents you from the temptation of spending money intended for your savings account.

2. Open a high-yield savings account (versus a traditional one).

The first step to successfully creating a savings fund is to open a dedicated savings account. The second step is to ensure that your savings account is providing you with the maximum returns available. Instead of opening a basic savings account, you should consider opening a high-yield savings account that builds wealth. These FDIC-insured accounts typically offer interest rates substantially higher than the basic account or a checking account, even when high-yield interest rates are low.

Unlike certificates of deposit or IRAs, you’re also able to withdraw money from a high-yield savings account multiple times per month without penalty. Best of all, most financial institutions allow you to open a high-yield savings account without a minimum balance or account activation fee.

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3. Save/don’t spend extra money (like income tax returns).

Creating a budget is a great way to help responsibly allocate how your paycheck is saved or spent. Though any additional income you receive is beneficial, it can actually be more difficult to save these miscellaneous funds. Inconsistent income such as tax returns, work bonuses, stimulus checks, and freelance income should ideally be placed directly into a savings account. By immediately stashing the funds in a savings account, you’ll resist the temptation to spend it – be it on your cell phone bill, at a grocery store or on an electric bill – and give your savings an unexpected boost.

4. Refinance debt to free up cash.

Unfortunately, paying down debts with high interest rates can unnecessarily increase your expenses and limit your savings potential with tight budgets. Thankfully, there’s one option that will help you manage your debt responsibly while devoting more money to your savings fund: refinancing. You may qualify for a lower interest rate on outstanding debts like your student loans, a personal loan, an auto loan, other loan payment and home mortgage.

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A lower interest rate allows you to continue chipping away at your existing debt and dedicate the would-be interest expenses to your savings account. In the simplest terms, it’s the difference between saving and spending a dollar: both amounts can add up quickly but only one helps preserve your financial future.

The bottom line

The coronavirus pandemic has certainly thrown the U.S. economy into disarray, which has only made it more difficult for people to devote a lot of money to their savings accounts and achieve financial wellness. Regardless of how positively or negatively the economy is impacted upon entering a post-pandemic future, there’s no denying that having a dedicated savings account will better position you to reach your financial goals, whether its saving for emergency funds, retirement savings or even to pay off credit card debt.

Refinancing outstanding student loan or mortgage debt, setting up direct deposits, and managing your supplementary income are all effective strategies for increase your savings bank account balance. No matter how much money goes into your savings fund, make sure you’re maximizing your interest earning potential by investigating high-yield savings options.

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