Nowadays it seems like an almost impossible task to find ways to start a savings account. With a bit of ingenuity and creativity it can be accomplished. Here is a review of five ways you can start a savings according to the Federal Trade Commission.
The first way is to have a clear idea of how much money have. You can do this by listing your income and expenses. Create a list of your income sources including weekly paychecks, odd-jobs, money from hobbies or other sources. Second write up a list of your fixed monthly bills such as mortgage, electricity, cell phones, car payments and other bills. Last make a list of other expenses including gifts, haircuts, clothing, and your daily caffeine-fix on your way to work. Small purchases do add up. These lists will give you an idea of where you could cut back on expenses or pick up additional money.
The second step is to make sure you pay yourself first each paycheck before paying bills or other expenses. This can be easily done by setting up an automatic deduction from you paycheck into a payroll savings plan, or an automatic transfer from a checking account into your savings. This step ensures you have a routine to add money to your savings every paycheck.
The third step is a little confusing. Don’t worry, you’ve got this. It’s about compounding interest. According to The Federal Trade Commission compounding interest is “the interest you earn on your initial investment plus all the interest that accumulates over time.” Interest accounts have what they call simple interest and Compounding interest. With simple interest you earn interest on your initial investment only. Compounding interest is the better choice for your investments.
The fourth step is what we will call “Extra” money. For example, anytime you get a raise you can take that “extra” money from each paycheck and deposit in your savings. Or when you pay off a debt you can take that monthly payment you would have that go directly into your savings. To make it easier, have these payments automatically transferred from your checking account to your savings.
The fifth step is finding creative ways to save money. Any money you do save you can deposit into your savings account. Some interesting ways to save money include going to local beauty school to have the students cut your hair. Often they do this for free or at a reduced cost. At Your local library they have books, music and DVD’s you can borrow for free. Try Bartering for another way to save. You have talents and things that people need, and people have talents and things you need. It’s free and can be fun.
You can start a savings with a little bit of work and creativity. Get your caffeine-fix on the way to work, just do it once a week as a treat. This simple step of a bi-weekly mortgage payment could save you a lot of money.