Tips to Grow your Savings
Savings is an essential part of wise money management. A budget that is balanced should allocate about 20 percent of your income toward savings or debt repayment.
Savings can be used for different reasons. Sometimes savings may need to be built to build a fund for the down payment of a home or a large expense such as a wedding. Savings funds may also be used to build emergency funds in the event of a sudden expense or job loss. Retirement accounts are also savings accounts.
Savings are less accessible than checking accounts because the money is not intended to be used on everyday expenses. Savings should be built up over time without the opportunity to use it for impulse purchases.
Tips for Growing Your Savings
Here are some tips for you to make the most out of your savings. If you are struggling to save because you feel like you are left with hardly anything at the end of a pay period, a bit of organization may help.
• Save 20 percent of your paycheck. Many financial specialists recommend that budgeters follow the 50/30/20 rule. With this setup, 50 percent of your paycheck is used to pay for essentials, including housing, transportation and other important monthly bills (think utilities). Lifestyle spending accounts for 30 percent and should not be exceeded. Shopping, restaurant expenses and non-work related travel fall into this category. The last 20 percent of your pay goes toward savings or the repayment of debt (or both).
• Set savings goals. Starting small is better than not starting at all. Even setting aside $25 at the same time each month gets you started down the path of developing a savings habit. Plan out gradual increases of the amount you put back until you reach the amount you would ideally like to put back regularly. You can also transfer any surplus into a savings account once a month.
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