How to Increase Your Savings Rate with Small Changes

Let’s be honest – saving money can feel incredibly difficult, especially when you’re juggling bills and everyday expenses. The thought of drastically cutting back or making huge sacrifices can be daunting. But the good news is, you don't need to make massive changes to see a real difference. Often, it's the small, consistent shifts that make the biggest impact over time.

December 17th, 2021 – It’s easy to get overwhelmed by the big picture when it comes to finances. We’re bombarded with messages about investing, retirement plans, and long-term goals. But focusing solely on those things can make saving feel like an insurmountable task. Let's break it down and focus on what you can control: your spending habits and your savings rate.

Start with a Tiny Boost:

The key is to start small. Aim to increase your savings rate by just 1% or 2% each month. That might seem insignificant, but over a year, it adds up to a substantial amount! Here's how to do it:

Track Your Spending: You can't fix a problem if you don’t know where your money is going. Use a budgeting app (like Mint, YNAB, or even a simple spreadsheet) to track every expense for a month. You’ll likely discover areas where you’re unknowingly spending money.
The Latte Factor: Seriously consider cutting out daily luxuries like that fancy coffee or daily treat. Those small daily purchases add up quickly. Swapping it for coffee at home can save you a surprising amount.
Round Up Your Purchases: Many banks and apps offer “round-up” features. Every time you make a purchase, the difference is automatically rounded up to the nearest dollar, and the change is saved into your account. It's effortless and adds up surprisingly fast.
Automate Your Savings: Set up automatic transfers from your checking account to your savings account each month – ideally right after you get paid. Treat it like a bill you have to pay.
Negotiate Bills: Don’t be afraid to call your service providers (internet, insurance, etc.) and negotiate lower rates. You might be surprised at the discounts you can secure.
Embrace the 30-Day Rule: Before making any non-essential purchase over a certain amount (say, $50), wait 30 days. You might find the urge to buy fades away.

Consistency is Key:

The most important thing is to be consistent. Don’t get discouraged if you have a month where you slip up. Just get back on track the next month. Focus on building good habits, and your savings rate will naturally increase.

Think of it as a marathon, not a sprint. Small, consistent efforts will take you far!