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How to Build and Contribute to Your Savings Fund

There’s no way around it—saving is smart. Whether you’re saving to buy your first home, take your dream vacation, or protect yourself from unexpected emergencies, having money set aside is invaluable. However, saving isn’t as simple as just throwing extra coins into a piggy bank. Building and contributing to a savings fund is a skill that takes time and effort to learn. Here’s how you can get started!

Your Account Counts

First thing’s first, you need a dedicated account where you can stash your savings. Keeping money, you’re trying to save in your regular checking account is basically begging yourself to spend it. 

Setting up a savings account helps you resist blowing your hard work on a new pair of shoes, but it will also allow your money to grow, as savings accounts usually earn higher interest rates.

Understand Your Spending

Track your spending
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If you want to master your savings, first, you’re going to need to master your spending. Evaluating what you spend your money on can help you identify areas where you can cut back and provides insight on how much you can afford to save. 

Try tracking the following expenses for a month or two:

  • Rent/mortgage payment
  • Transportation
  • Utilities
  • Groceries
  • Entertainment
  • Dining out 
  • Monthly subscription services
  • Incidental expenses
  • Shopping 

Pro Tip: It isn’t a bad idea to make tracking your spending a lifelong habit!  

Tackle Tax Time 

Pay your taxes
Image by Steve Buissinne from Pixabay

You might not realize it, but taxes can play a big role in making or breaking your savings plan. While filing your taxes on time and organizing your IRS documents can be an administrative nightmare, doing so will pay off 100% of the time. 

Here’s how taxes can make a difference:

  • The Good – Staying on top of your taxes means you might be lucky enough to get a refund. As tempting as it may be to view your return as extra recreational money, adding your returns into savings is a great way to give your fund an annual boost. You can also use a tax refund calculator to get a better idea on what you can potentially expect to get back. 
  • The Bad – On the other hand, neglecting your taxes could delete your savings if you end up in tax debt. Staying organized will help you avoid using the money you’ve been saving for a trip on IRS payments, a tax lien, or an IRS Payment Plan. 

Get Creative

Start saving
Image by Horst Koenemund from Pixabay

There are tons of tried and true ways to save money, but don’t let these conventional methods limit you. Just because we said saving isn’t as simple as putting money into a piggy bank, doesn’t mean you can’t still save your extra change. 

Even small, creative changes like promising to put $5 into your savings account every time you splurge on an iced coffee can add up. 

Consider these creative ways to help boost your savings:

  • Sell your unused items – Not only will you have more space, but you’ll also have more money. 
  • Take up a side hustle – Let your talents make you money. As a bonus, staying busy will also help you cut down on spending. 
  • Learn how to cook – Your wallet and waistline will thank you for cutting down on ordering unhealthy and expensive takeout. 
  • Clip coupons – You don’t have to break out the newspaper to find a good deal. Many retailers offer online coupons and discount codes.
  • Go eco-friendly – Carpooling, cutting down on single-use paper and plastic products, and being aware of your electricity usage is small changes that will help the planet and increase your savings. 

You’re in This for the Long-Haul

There are two main essential qualities you need to foster to become a great saver—patience and discipline. You might find it surprising that patience is the most difficult quality to master. Remember, saving takes time, and whether you save $100 or $1,000, you’re improving your financial backbone. 

Start Saving!

Now that you know the keys to building and contributing to a savings fund, it’s time to start saving! The sooner you start putting money away, the sooner you’ll be able to sit back and enjoy your financial freedom. 

Happy saving! 

Featured Image by Brett Hondow from Pixabay