*Pay yourself first: The best way to increase the balance in your savings account is to make it a priority to put money there. That means you need to stop thinking about savings as something you do at the end of the month after the bills are paid, and instead think of your savings account as one of the first bills to be paid.
Make a point to deposit money into your savings account every pay period. Even better, if your employer allows you to direct deposit to more than one account, arrange for 10 per cent of your income to go into an online savings account or other high-yield account. If you think your budget is too tight to set aside that much, remember that at most institutions, money can easily be transferred from savings back to current accounts. However, once that money is in savings, you may realise how little you really need it.
*Use cash and save: A cash-only spending system can be beneficial for a variety of reasons. Some studies indicate consumers spend less with cash, and withdrawing a set amount of money for groceries, gas and discretionary spending can make it simpler to stick to a budget. It is usually much easier to see how much cash you have left in your hand than to try to do fuzzy current account math in your head.
Combine your cash system with a good old-fashioned coin jar to give your savings an added kick. Put your coins and naira bills in the jar each evening. Then, count it at the end of each month and deposit it into your savings account and voila! Painless saving!
*Save; don’t spend ‘found’ money: Everyone “finds” money sometimes. It can be literally found in an old coat or the couch cushions, or it can come in the form of a rebate, refund or even that cheque an Aunt sends each year for your birthday.
But rather than sticking that cash in your wallet and letting something else or vending machines erode it away, store it in your savings account and earmark it for a higher purpose, like that vacation you have been promising yourself the last three years.
*Direct deposit your tax refund: Along those same lines, sock away that cheque from an uncle you may receive each year. Fortunately, the bank offers direct deposit, making it easy to route that money right into your savings account. Because you will never see it in your current account balance, you will be less tempted to use it on, say, a treadmill that you will use twice.
*Sell your clutter: Maybe it is too late and you have already bought the treadmill. Don’t despair. Unloading all the useless items from your house can lighten your clutter and fatten your wallet. Excess clothes can go to a consignment shop, DVDs hiding in the dark corners of the entertainment centre can find new homes online, and large items can be sold on the Internet. Then, take all that new-found cash to your bank and watch your savings account interest grow.
*Roll your interest: Whenever you have the opportunity, roll any interest you earn back into your savings. This is particularly true with fixed deposits and other high-yield savings accounts. You may think of fixed deposit interest as income to be spent once the fixed deposit matures, but it is better to instead lump it into that “found” category to be saved. Keeping it invested will allow you to reap the sweet rewards of compound interest.
*Reduce spending: Yes, it seems obvious. But spending less really is a great way to free up money for savings. You may think your expenses are fixed, but there is probably plenty of room to cut costs. Consider a cheaper cable package, find a current account with fewer fees, clip coupons, compare insurance rates, ride the bus or even refinance your mortgage and auto loans. Budget trimming is as much an art as it is a science, and there is virtually no limit to the possibilities for shaving monthly expenses.
If you view it as a priority, saving money doesn’t have to be painful. And once you create a savings plan that you can follow, you may never find your balance lingering in the single digits again.
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