First, take a look at where you are spending your money and see if you can cut back on anything. You might discover a few subscription services you aren’t using very often or see how much you are spending on eating out and decide to try cooking at home. According to CNBC‡, a cappuccino in most cities cost nearly $6. If you buy one every single day of the week, you are spending 30 a week which adds up $1,440 a year in coffee! Making your coffee at home with a classic coffee pot or buying a fancier machine so you can make your own cappuccino would end up saving you big time over the year.
Reviewing your budget and understanding where your money is going every month is a great opportunity to see where you can make small changes that have a big impact on your savings goals.
If you find it hard to save before you spend, start small and easy. Most employers will let you set up an automatic direct deposit of your paycheck to a savings account along with your checking account. With a direct deposit, the money will appear every month without you even having to think about it.
While cutting back on monthly expenses and establishing automatic transfer can help with short-term savings goals, don’t forget about your long-term goals like saving for retirement or a large purchase like a car or home. You might want to explore a time deposit account that allows you to earn interest faster at a higher interest rate than a regular savings account. Or you might want to consider opening an individual retirement account to kickstart your retirement savings.
A financial advisor can help you determine which savings vehicle and strategy is the best for your specific financial needs but remember every small change can make a big impact on your bottom line.
Learn how to better manage your money to build a stronger financial future for you and your loved ones through the Family Finances playlist on the UMB Financial Education Center.
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