How to save money is the most common question asked by people who are looking for smarter ways to save money. The age-old method is to put your extra money in the jar and seal it until it gets full. This is hardly practical these days unless you are planning to buy a toaster.
One of the best ways to save money is to save extra money in the bank. Then again there are others ways you can maximize the benefit of saving money in the bank. Choosing the rights scheme and plan can help you save smart and save more while reaping the extra benefits.
How Much You Should Save?
The first thing that you people want to ask is how much money is ideal for saving the account. One of the simplest answers is as much as you can. Saving money naturally depends on how much you earn. Saving 10% to 20%of your earning is considered ideal. But, the best thing is to save as per your requirements. Saving money by not paying your rent is hardly practical.
- Fix an amount to save every month and stick to it.
- Deposit the money in the saving account first then pay your bills and rents.
- Automate your deposit for convenience and discipline
How NOT to Save Money
When you are thinking about how to save your money, you will also have to think how not to do it. The bank is not the only way to save money. There are other traditional and somewhat dangerous ways to save money.
In the Jars
For instance, never save your money in the jar. If you are thinking long-term, the jar is the least productive way to save money. What happens if there is a fire or burglary? Physical money is prone to damage and you should not stash it away in some jar. This applies to every other place you may want to hire like your mattress, secret drawers, under the ground and so on.
In the locker
Banks provide locker room to let people save their valuable things in there. Money should not be in it. If you keep all the cash in there for long, it may get damaged. Yes, you can smell them when you go into the locker. The physical money is again prone to damage by moisture, handling, and other aspects.
Multiple Bank accounts
By far the best way to save money is in the bank. But having multiple bank accounts for saving money isn’t practical. Like having a saving account, retirement saving account, the one for emergencies, for a wedding, for buying a house and the list goes. This can become too overwhelming.
- If you are starting off just now, a star with one saving account and when you need them for something use it based on the priority basis.
- Suppose you wanted to buy a car, but then there is a medical emergency. You can use the money for the emergency and think about the car later on.
How to Save your Money in the Bank
Everyone knows the bank is one of the safest places to save money where you get rewarded with interest if you save them for a longer period of time. Now that there is lots of competition in the banking sector, banks are offering lucrative deals to grab the attention of the customers.
- Save in high-interest saving account. They may be a bit more restrictive in terms of how long you can keep the money for, but they pay handsome interest. You can always find the best offers to save your money.
- Term Deposits are the same as the high saving account, but they are more beneficial. If you are not going to use your savings for say a year or more, then this type of savings account is the best. In the end, you will walk away with a huge interest in your saving.
- Tax-Free Savings Account (TFSA) allows you to save money and it shields you against any tax. You can save up to $5,500 per year into your TFSA account and you don’t have to pay any tax on the interest that you earn or even when your investment grows. You don’t have to pay tax either when you take out your money.
How to Make More Money
You can always find ways to earn more money from different sources. You can use this extra money to save in your bank account. Here are some of the reliable sources where you can make more money:
- Pay raise: When you get a raise in the office save that money away in your saving account. This is a convenient income source for many.
- Bonuses: Save all your bonus money in your saving account. Since this is the extra money you don’t need to spend them immediately.
- Get paid for overtime: You can opt to work overtime a few times a week to earn a little bit extra and save that money in your bank.
- Save commissions earned in your work: Again, this is extra money and you don’t have to use them immediately. So, save those handsome commissions in your saving account.
- Tax refund: Find ways you can save money on the taxes and when you get them to make sure to save them away in your saving account. Opening a retirement saving account is one way to save tax money or get refunded.
When it comes to how to save the money that provides you with extra benefits these are some of the best answers. You can find many ways to do starting right at home first. Slowly and gradually you will see that your financial situation is improving and you have saved more money than you had hoped for.