5 great ways to boost your savings while on a budget
Meeting your savings goals can be a challenge, especially when you're on a tight budget. While inflation is cooling across the nation, Americans' dollars still have to stretch further than normal right now for housing, groceries and other costs. The looming threat of a recession and the recent interest rate hikes have also made it more difficult for many people to ensure that savings goals are on track.
But while your tight budget may be putting up roadblocks for your savings goals, there are a few simple ways to make progress on your financial goals, no matter how strapped for cash you may be. By following these tips, you'll be better prepared to maximize your savings and reach your financial goals.
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5 great ways to boost your savings while on a budget
Here are five things you should consider doing now to increase your savings.
Consider a high-yield savings account
If you're stowing your savings in a regular savings account, you could be leaving money on the table. A high-yield savings account functions much like a regular savings account, but offer much higher returns on your money.
The average regular savings account interest rate was just 0.53% as of July 20, 2023. However, high-yield savings account interest rates are typically much higher, and many are offering interest rates of 4.5% or higher.
You will have to meet certain account minimums for many of these accounts, but if you have enough socked away to meet the requirements, a high-yield savings account is a simple way to grow your savings without much effort.
Revise your budget
To effectively save money, you need to have a clear understanding of where your money is going — and where you can cut back to put more money into your savings account. Luckily, there are tons of simple ways to do this, and you don't have to take the pen-and-paper route unless you want to.
If a simple spreadsheet is too labor intensive, try using a budgeting app to monitor your spending habits instead. Many of these apps can be connected to your credit cards or bank accounts, and some even offer unique functionalities that can be used to end unnecessary subscriptions or determine where your spending habits are concentrated.
Once you've identified what your expenses are, you can use that information to make an informed decision on where you can cut back and then redirect the money toward your savings.
Automate your savings
Another easy way to maximize your savings is to set up automatic transfers from your checking account to a separate savings account. Nearly every savings account, high-yield or otherwise, offers the option to automate your savings.
By setting up your accounts to automatically transfer money to your savings, you ensure that a portion of your income is consistently saved without you having to think about it. This approach also helps to eliminate the temptation to spend the money you would have otherwise tucked away into your savings.
Snag a bank bonus
While snagging a bank bonus won't be a consistent way to add more money to your savings, it can be an easy way to add a few hundred dollars to your account. Some banks will offer bonuses simply for opening a new account and meeting some basic requirements, like setting up direct deposit or having an account balance that meets a minimum threshold.
These bank bonuses vary, of course, but some offers can go as high as $250 or more. But you may be able to snag even more in bonus cash to add to your account. Many high-yield savings accounts have higher account minimums, but they can come with higher bonus offers than what you would get from a regular savings account.
In all cases, just be sure to read the fine print before signing up for a bonus so you'll know how to meet the requirements. Also watch out for minimum balance requirements that might make it difficult to open or maintain your account, as well as account fees that could eat away at your bonus amount.
Learn more about the best savings options available for your money here now.
Add an additional income stream
While cutting expenses is essential, increasing your income can supercharge your savings even further. You don't necessarily have to take on a part-time or second job, either. It may benefit you to explore opportunities for additional income, whether it's occasional freelancing, gig work or even monetizing a hobby or skill.
Even a few hundred dollars a month can be a big boon to your savings. As you start to increase your income, though, you should try to avoid the trap of extra spending. Any extra income you earn from your side projects should be funneled directly into your savings rather than your checking account, where it can earn interest to further compound what you've tucked away for an emergency or a large purchase.
The bottom line
Maximizing your savings while on a budget is entirely possible with the right strategies and mindset. Start implementing these tips today to watch your savings grow while staying within your budgetary constraints. Remember, every small step you take toward saving brings you closer to solid financial footing.
