4 Tips to Become a Smart Saver

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We all know about the importance of saving money. But sometimes it can be challenging to save consistently when you have bills and other essential expenses to take care of.

A key to comfortably balancing your savings and spending is to build good habits early in your financial journey. Here are a few ideas to help you get on your way to growing your savings.

1. Create a budget and look for opportunities to save more

A budget can give you a better understanding of your finances. It’s a great way to organize yourself and track where your money is going each month. If you’re looking for opportunities to save more, zoom in on your discretionary spending and see if you could cut back or eliminate certain recurring expenses.

Of course, that’s not to say you have to give up on things you enjoy doing – simply that, if you want to be more mindful about your spending, figure out where you can start to make small adjustments in your budget. Saving a few dollars here and there may not seem like much at the moment, but those savings can really add up over time.

Taking a look at your subscriptions and memberships can be a good place to start. Are there any services you’re not using or do not want anymore? If you’ve set up automatic payments for them, it can be easy to forget just how much you’re shelling out each month for those unused services.

You may also want to go over certain essential expenses too. For instance, if you have car or home insurance, review those policies and see if there are steps you could take to help lower your premiums.

Learn more: How to Save on Homeowners Insurance and How to Save on Car Insurance

2. Automate your savings

Some people approach saving as an afterthought – they simply save what money is left over each month after paying their bills. This passive approach can make it hard to save consistently over the long run.

Try getting into the habit of “paying yourself first.” This is when you proactively aim to save a portion of your paycheck first before you have a chance to spend that money on something else.

One way to do this is by automating your savings. If your bank account offers an automatic deposit or transfer feature, consider setting up recurring transfers from your checking account to your savings account. This can be a great way to build your savings without having to force yourself to do it each month.

Take a look at your budget and determine how much you can comfortably put away each month toward your goals. Depending on your financial situation, you may have to start small, but that’s OK! When it comes to saving, every bit helps. Consistency is key to reaching your savings goals in the long run.

3. Understand how different savings accounts work

When thinking about where to park your cash, a traditional savings account is probably the first option that comes to mind. The way it works is pretty simple: You deposit money into the account, let it earn interest, and make withdrawals when you need it.

But there are other types of deposit accounts that can help you get more for your money. For instance, high-yield savings accounts and certificate of deposit (CD) accounts generally offer higher interest rates (expressed in annual percentage yield or APY) than traditional savings accounts.

No matter what you’re trying to save up for, understand your savings options and how different accounts can work together to help you reach your goals. Check out our Guide to Savings Accounts to learn more.

Good to know: When you’re ready to open a new savings account(s), make sure your bank or financial institution is a member of the FDIC. Deposits held at a FDIC-member bank are insured up to the maximum allowable by law, which is currently $250,000 per depositor, per FDIC-insured bank, per ownership category.

4. Save for retirement early

If your job offers a 401(k) plan, try to contribute as much as you can, especially if your employer offers to match your contributions. Remember, the sooner you start saving, the more time you can give your money to grow through the power of compounding. If you don’t have access to a 401(k) plan through work, you may want to explore different types of retirement savings plans like an IRA.

This article is for informational purposes only and is not a substitute for individualized professional advice. Articles on this website were commissioned and approved by Marcus by Goldman Sachs®, but may not reflect the institutional opinions of The Goldman Sachs Group, Inc., Goldman Sachs Bank USA, Goldman Sachs & Co. LLC or any of their affiliates, subsidiaries or divisions.