Making Savings a Priority

Posted by Mike Smith :: August 17, 2007 @ 7:50 am

Despite your best intentions, you may not be saving as much as you’d like. Many times this situation occurs because savings is our last consideration. By moving savings up on our list of priorities, we can all save more. Here are a few strategies to help grow your savings:

Use direct deposit
If you are able to be paid by direct deposit, you should do so. Having all of your money placed in the bank and then taking out what is needed for expenses may lead to fewer temptations. The alternative, cashing your paycheck and trying to save whatever you have left at the end of the month, never seems to work as well. As often occurs, you may have an increased desire to spend if you have money in your pocket.

Save raises
One of the ways that I save is to pretend that I never get a raise. When I do get a raise, I divert the extra money in each paycheck directly into a savings account. If you were getting by before the raise, you can certainly continue to do so without it.

Pay down your debt first
It doesn’t make sense to save too much of your money if you’re in credit card debt. The interest that you are earning on your savings will be much less than the interest that you’re paying out on your credit card balance each month. While you have credit card debt, consider allocating the majority of your available money towards reducing your debt. For an even faster way to pay off your credit card, consider a P2P loan from Lending Club.

What’s your pre-tax savings rate?