YOUNGSTOWN, Ohio (WKBN) – Saving for the future can be scary, especially when you realize how much you could be saving.
According to Bankrate, barely half of Americans have more money in their savings accounts than they have in credit card debt.
A recent survey from Go Banking Rates shows that 62 percent of Americans have less than $1,000 in their savings account, and 21 percent of people have no savings account at all.
Ryan Nisbett is a financial expert with Cottonwood Associates, he knows a lot about how people can save money for their future.
The first thing he recommends is to get a cash rewards credit card, this way you can earn money to save money, by spending it.
“Do your research to find a good cash rewards card and use it to pay for everything you can, like groceries, utilities or gas,” Nisbett said. “When you find out the amount of your cash reward, put that money straight into a savings account. It’s extra cash you will never miss. Just remember, like any credit card, it’s important to pay the balance in full every month.”
He also suggests to play the “savings lottery.”
“A lot of banks and credit unions are starting savings accounts where you can win prizes. By making a deposit, you get a chance to win cash,” Nisbett said. “The big difference here is it’s not nearly as risky as buying lottery tickets because you don’t lose the money spent on buying the ticket. That ends up in your savings account and you still get a chance to hit the jackpot.”
Another one of his tips is to make saving money a group goal. View it as a competition between friends or family where the group comes up with a savings goal and competes to see who can reach it first.
He also explained how a savings club works. Groups of people pool a certain amount of money each week and rotate who gets that money at the end of the week. For example, if you have a group of five people, each person gets one identical payout over five weeks, which they then deposit right away.
“Any time you get friends involved, it is someone to hold you accountable and it creates some extra motivation to save,” Nisbett said.
Another money saving option is to use automatic options when banking. Automatic transfers are easy to set up, and every month they take a set amount of money from your checking or other spending accounts and put it into your savings account.
“There are countless ways we can have the electronics do the work for us these days, and a computer program won’t cave into temptation and decide to make that impulse purchase instead of socking money away,” Nisbett said.
He explained how some apps will even automatically round up every purchase to the next whole dollar amount and invest the extra cents. Other apps can study spending habits or bills and make small automatic transfers of perceived extra cash into your savings account, two or three times a week.
Nisbett’s final suggestion is to bank any new income you receive. For example, if you just got a pay raise you should put your increased income into your savings account.
“You’re already used to living on the amount of money you’d been making previously. You won’t miss the extra cash since you never had it before,” Nisbett said.
Another example he gave was if you recently paid off a car loan or credit card debt. You should keep making those payments, but pay yourself by transferring the money into savings instead of sending it to the lender.
“If you need some of the new-found income just to get by, think about taking at least half of what you had been spending on those bills and putting it into savings each month,” he said.
But, if these options are too much to start out doing, taking simpler steps to become better at saving money can also help.
His first smaller suggestion is to start a change jar and save your change.
“We’re using a lot less cash these days, but even if you only save $10 in change a month, that ends up being $120 in a year,” Nisbett said.
Another simple way to save is to start saving coupons.
“You have to go through the effort to find the coupons and bring them to the store, but when you use them and the receipt shows how much money you saved, put that money into savings,” he said.
And finally, buy discounted gift cards.
“If stores and restaurants will sell you something like a $50 gift card for $40 or $45, put that extra $5 or $10 into savings,” he said.