“Saving money is something we can control. It may not be easy…but saving money is possible.”— Kim D. H. Butler
If you’re wondering how to save more money in 2021, we’ve got you covered. COVID-19 has highlighted the importance of having savings, something many Americans have struggled with. After all, humans are inclined to spend more when we earn more. The unfortunate consequence is that we get caught in a cycle of spending that we never outpace.
On the other hand, saving is proactive. Although you’ll want some discipline to start saving, it pays in the long run to have an Emergency/Opportunity fund.
The foundation of building wealth is saving wealth. This is something the wealthy understand; although it’s commonly believed that the wealthy are simply good at earning and investing and navigating tax strategies, they’re also phenomenal savers.
Your Financial Foundation
Saving is the cornerstone of a wealth-building strategy. That’s because saving:
- Gives you confidence to invest or take some (calculated) risks,
- Provides liquidity for emergencies AND opportunities,
- Protects your investments from interruption,
- Helps you weather economic storms,
- And much more.
If that isn’t convincing, it’s also good for the overall economic health of the nation. When people save, they rely more on actual money than credit, which ebbs and flows. When an economy relies too heavily on credit, it’s more susceptible to “bubbles” that will pop sooner or later. If you’re wondering how to save more money, let’s dig into these 7 habits for success.
Improving Your Savings Habits in 7 Steps
1. Track what you’re spending
This step can be painful if you’re a habitual shopper (online shopping has been booming since lockdown), yet it’s necessary to saving more. By tracking where your money goes each month, you can establish a good baseline. That way, you know how to save more money in a way you can afford.
2. Pay yourself
While some spend their money how they like, and save what’s left over, this is inefficient from a savings standpoint. Savers with good habits prioritize saving by “paying” themselves first, and THEN spending what’s left over. Look at savings like one of your “bills” and choose what percentage you’re going to pay into your savings. After that, you’re free to spend.
3. Determine your priorities.
What is most important to you and does your spending reflect that? Does your bank account reveal what’s important to you? The proof is in your bank statements—where your money is going, and to what. That will help you determine how you want to move forward.
4. Add more than you subtract
No one likes to deprive themselves, and you shouldn’t have to! Rather than taking things out of your “budget,” seek to add new things to your routine. Add more home-cooked meals into your week, add more movie nights at home, add a garden to your home, etc. These activities will not only enrich your life, they will boost your savings. Think of all the money you spend on groceries, snacks, entertainment, and more—and then seek ways to add habits and activities that will help you save a bit of money!
5. Automate your savings
When you have systems in place that make saving money automatic, you remove your ability to slip up or change your mind. Knowing how to save more money becomes much simpler when you automate. Making automatic withdrawals and transfers will ensure that you account continues to grow, your insurance premiums get paid, and your investments are funded.
6. Put that account out of sight
When access to your cash is too easy, saving is that much harder. You begin to justify little things because it’s not that hard to make a quick transfer. By opening an account at a separate bank account or credit union, or buying a whole life insurance policy for saving, you’ll nip those temptations in the bud.
You’ll still have access to your money, YET, you’ll have to stop and think before you dip into those funds.
7. Owners save money
Owning your home or investing in real estate may be two of the most important decisions you’ll ever make. Renting is okay in the short term, yet in the long term it feels like you’re shoveling money into a black hole. Mortgages and rental income, on the other hand, are great for leveraging wealth.
How to Save More Money in More Ways
How to save more money? You save a dollar at a time. No more, no less—so don’t be afraid to start. Banks or credit unions are a great place to start building your emergency/opportunity fund, then as your account grows you can consider even better options.
The wealthy often utilize high cash value whole life insurance for savings that they can leverage. Cash value insurance can help you:
- Beat the bank rates
- Boost your savings in the long term
- Increase your certainty in the face of hardship
- Protect your family for good
- Grow tax-deferred wealth
- Pass your wealth to heirs tax-free
- Shield your wealth from the prying eyes of the IRS
- And much more
To find out if this strategy is right for you, check out our blog on the pros and cons of whole life insurance. To get started on your savings today, contact us to be put in touch with a Prosperity Economics Advisor.