There’s a tried-and-true formula for how to save money fast, and it consists of three major components: strategy, sacrifice and sustainability.
Saving money is hard, and saving it fast is even harder. So how can you save so that it really adds up in a meaningful way? People do it all the time. And with a little coordination and lots of commitment, you can too.
Your finances may not be as tight as you think once you really dig into where the money is going each month. As we mentioned above, fast-tracking your savings is often about making sacrifices. The trick is identifying those discretionary dollars and earmarking them for saving, not spending.
If you’re able to build a structured strategy and stick to it, you’ll start to see gains. And seeing those gains may inspire you to save even more. That “save money fast” mentality will serve you well in the long run and pave the way for financial security.
So what are some of the best ways to save money fast? Here’s a solid four-point plan to help you boost your savings in record time.
1. Open a designated savings account.
You’re ready to save money fast. That’s great. But where will the savings go? You need a dedicated spot that’s accessible but not too accessible. Something that’s secure and compatible with your savings goals. A designated savings account at your bank is a great choice.
Commingling funds can be problematic, so be sure to separate your checking account from your savings account. Having a dedicated account for your accelerated savings goals will legitimize and focus your efforts. Your monthly statement will be an accurate reflection of how much you’ve saved, keeping things simple and straightforward.
Most banks have different savings account options. You’ll need to decide which is the best fit for your savings strategy. What’s the minimum deposit? Are there any fees? How much interest does it earn? The average interest rate on U.S. savings accounts was 0.6% in February 2022, so aim high!
Choose your savings account carefully. This is where you’ll be making regular deposits and routing any smaller windfalls to rapidly advance your savings.
2. Track spending and cut unnecessary expenses.
The best way to save money fast is to convert dollars you’re spending into dollars you’re saving. Put your spending under a magnifying glass and identify unnecessary expenses. Entertainment, eating out and various subscriptions that auto draft each month are a good place to start. Tally them up, cut back and send that money directly to your savings account. Do not pass go!
Look for monthly expenses that are already subtracted from your cash flow and route them right into your savings. Congrats! You’ve transformed a recurring expenditure into a savings stream. Now you’re learning how to save money fast.
Rooting out frivolous spending is just the first step. With that out of the way, you should be able to zero in on how much money is left each month after covering necessary expenses. For many households, that cushion is dwindling. But don’t let that discourage you from pursuing aggressive money savings strategies.
3. Create a savings plan with realistic goals.
Before you get too zealous, you’ll want to do a reality check and map out a savings plan. This frank assessment of your finances will help you set realistic goals. Savings plans also help you determine how much money you need to set aside each week or month to reach those goals. And getting started is easy with tools like this one from the Consumer Finance Protection Bureau.
For many aspiring fast savers, it boils down to one critical question: How much should I save each month? Financial experts often favor the 50/30/20 rule of budgeting, which sets aside half of your income for necessities, earmarks 30% for other expenses and reserves 20% for savings and investments.
Diverting a fifth of your income to savings is a tall order and requires a healthy amount of discipline. And if you’re serious about saving money fast, you’ll want to consider socking away even more than 20% of your income. Money saving tricks to hit that target include stacking savings as your income grows, saving “extra” paychecks and withholding a certain percentage of bonuses for your savings account.
Start with a modest savings plan and then scale up over time, if possible. Consider expanding your goals as you find more flexibility within your finances. Take a cue from those who make extra, small principal-only mortgage payments each month to save thousands of dollars over the life of their home loan. That’s the definition of making a little go a long way!
4. Automate your savings and reassess your strategy.
Imagine the reverse of those auto-drafted subscriptions draining your funds. Instead of those dollars leaving your checking account each month, they’re automatically deposited into your savings account. Goodbye, debits. Hello, credits.
Automating your savings is a great way to save money fast. Once you’ve opened a savings account, trimmed expenses and developed a savings plan, the last step is just plain easy. Settle on the amount you want to stow in savings each month and then contact your bank to authorize automated deposits.
Keep a watchful eye on your budget for the first three to six months and then reassess. Were you a bit too aggressive? Not quite aggressive enough? Look for other creative ways to save money. Try bundling your insurance. Or dropping that rarely used gym membership. Or even picking up a side hustle for a little extra income.
Now you know how to save money fast. Not as intimidating as you thought, right? If you’re ready to level up your savings, contact Community Point Bank today to discuss which type of account can help you reach your goals faster.
