It’s no surprise that Americans are not particularly good at saving money. Even after the financial crisis of 2008, the savings rate only went up to about 5.5%, and it was back down to 2.6% by 2013, according to Sheldon Garon, a Princeton University history professor and author of Beyond Our Means: Why America Spends While the World Saves.
More recent data is even less encouraging. A May 2014 study by Interest.com, part of the financial website Bankrate, that analyzed data for 18 major cities from the Bureau of Labor Statistics found the average savings rate in all but one city was zero.
Most of us know the reasons we should be saving more (long-term financial stability and the ability to cover unexpected expenses without going into debt among them). But we still find it difficult to do.
There are steps you can take, however, to make it easier to stick to your savings goals. Matt Curfman, certified financial planner with Jackson, Michigan-based Richmond Brothers, says the first is to identify your financial goals and keep them in mind. “There is a difference between saving more, and saving more with a focus,” he says. “It is great to always be saving more, but it is important to understand why you are doing so and how it directly affects your goals.” Here are six more ways to step up your savings.
1. Get a Second Bank
Rather than keeping all your funds in one place, Curfman recommends opening a savings account at a different bank from the one that hosts your checking account. Since you’re likely constantly monitoring and accessing your accounts at your normal bank, keeping savings in a different place can be a good idea. “It is easier to save more each month when you aren’t reminded of what you’re missing,” Curfman says. Keeping a separate account also makes it more difficult to transfer savings into your checking account, lest you be tempted.
2. Automate It
Have a portion of each paycheck deposited directly into your savings account, recommends Jeanette Pavini, Coupons.com saving expert. If you already do that, Pavini suggests increasing the amount of the deposit by 1%. “It’s little enough that you probably won’t notice it, but big enough to make a difference,” she says. “If you make $50,000 a year, that’s an extra $500 [in savings each year].”
When you send money into savings directly from your paycheck, it’s easier to forget you ever had that money. If you’re self-employed or your employer doesn’t offer direct deposit, set up an automatic transfer into your savings account on a weekly, bi-weekly, or monthly basis. The faster you move that money out of your checking account, the easier it will be not to spend it.
3. Put the Difference From Discounts Into Savings
Couponing has become a favorite pastime for many during the past several years. It’s no wonder, since setting aside 20 to 30 minutes each week to plan menus around grocery coupons and weekly store ads can save you about 40% off your grocery bills, Pavini says. If you’re new to it, you can find numerous classes, workshops, blogs, and publications to help you get started or get better at saving money from your purchases.
But once you’ve started saving with coupons, don’t forget to actually save the money—that is, deposit it into your savings account rather than simply leaving it to spend on something else. “At the bottom of your receipt, many stores will list the amount you saved,” Pavini says. “Take that amount and immediately transfer it over to your savings. You may want to use mobile banking so you can transfer it before you even leave the grocery store. That way you won’t be tempted to spend it on something else. Doing this could amount to hundreds, even thousands, extra in your savings each year.” And you’ll hardly miss it.
4. Pretend You Never Got That Raise
Every year that you undergo the annual review process and are rewarded with a raise, “continue living off your previous salary and set aside the extra money,” Curfman says.
Kathryn Garrison, senior financial advisor from Moss Adams Wealth Advisors, recommends increasing the percentage going to your 401(k). Once you max out your 401(k), save in a Roth or Traditional IRA.
If you’ve continued to maintain the lifestyle (and expenses) you could afford with your lower salary, each consecutive raise will result in exponential additional savings.
5. Harness the Power of Spare Change
It might sound petty, but saving up your loose change can lead to significant savings—about $10 billion in loose change is sitting around idle in American households, according to Coinstar. A coin jar can also serve as a daily visual reminder to save. At the end of each day, Pavini recommends stashing whatever change you have in the jar. At the end of each month or year, cash it in and deposit the total into your savings account. It only makes sense to take control of the extra money lying around your house and let it start helping you reach your savings goals.
6. Get Cash Back—and Save It
If you use a credit card, reconsider whether it is the best one for you. Rewards cards often carry a higher interest rate. So, unless you can pay off your balance in full each month, your rewards may be negated by interest, Pavini says.
If you are able to pay off your monthly balance, Pavini recommends looking for a card that offers cash back on the purchases you make most often. If you eat most of your meals at home, consider one that offers cash back on groceries, she says. If you travel for business, look for one that offers cash back on hotels or dining out. “The cash back is a bonus,” she adds, “so put it right into your savings.” Pavini says she has personally saved thousand of dollars depositing cash back from her credit card directly into her savings account.