Stop Spending and Start Saving

December 4, 2008
By Kevin Cafferty

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Getting a savings account is a good first step towards financial stability, but it's that important second step - putting money into that account - where a lot of people falter. It is recommended you have three months' salary worth of expenses in your savings account in case of unforeseen emergency such as auto repairs or loss of job. Here are some tips to get your savings up.

Pay yourself first - The way most people save is they get their paycheck, pay their bills, allocate money for that period's spending, and then put whatever is left over into the savings account. This method makes it too easy to dip into the funds earmarked for savings before depositing them. A better plan is to set up a separate direct deposit directly into your online High-Yield Savings account that puts the money away as soon as you're paid. Out of sight, out of mind. If you don't see the money as part of your paycheck budget, you'll be less likely to touch those funds.

Bank Your Change - Set up a spare change jar (or piggy bank - I've got one shaped like a dalek from "Doctor Who", but if you're not a gigantic nerd, any old jar or canister will suffice) and dump whatever spare change you've accumulated over the course of the day into it. You'll be amazed how much adds up over the course of a few months, which you can then deposit into your High-Yield Savings account, where it will accrue interest along with your savings from Step 1.

Budget - Yes, I hate doing it too. But if you actually take the time to write down where your money is going each month you'll be able to find any number of places you can cut spending and increase savings. Sometimes the shock of finding out you're spending almost $100 per month at Starbucks can be the perfect catalyst to brew at home and sock away the saved dough.

There are many, many other ways to increase your saving and cut down on your spending - I'll be listing more on this blog in the future, and if you've got some suggestions of your own feel free to comment below.