Having money in the bank is great because you can see yourself making progress towards your goals. It's also a nice buffer for absorbing shocks and surprises without taking on debt. So, how do you increase your bank account balance—maybe even double your money?
We all know the formula: Save more and spend less. But that knowledge alone is usually not enough to change your behavior without concrete action steps. Before you get started, it’s wise to think about your goals—the things you want, and why you want them—so you'll be more motivated to do it.
Pay Yourself First
One of the most important steps to take is prioritizing saving. You probably know exactly how much you spend each month on your rent or mortgage payment—you need to make that payment or you’re out on the street. Can you say the same about the money you put toward your financial security?
To "pay yourself first" means making saving a priority. When you get your paycheck, you may be tempted to pay bills, buy groceries, and spend a little cash, saving what's left over at the end of the month. But if you pay yourself first, you put a portion of your pay into savings and then figure out how to live on the rest. A vague desire to save money won't get you where you want to be; you need to set specific dollar amounts and execute a plan of action—preferably automatic—that works toward that goal. Here are a few steps to take:
- Set up an online savings account and arrange an automatic monthly transfer into that account (start with a few dollars if that’s all you can afford).
- Tell your employer to send a portion of your paycheck to a savings account—not your everyday checking account, where you'll be tempted to spend it.
- Sign up for your employer’s retirement plan.
- If you use a budget, create a new category for “Monthly Savings.”
Control Your Spending
For most people, the fastest way to save money is to cut costs. It’s also the most painful (and it might not be the most effective if it's difficult to maintain).
How do you do it? Get a handle on how much you spend. Track your expenses, whether you use a pen and paper, an app, or budgeting software. Don’t put too much energy into picking the "best" system to track your spending—just get started. You can change your mind about the specifics later.
If you have a hard time keeping track of things, spend electronically so that your bank creates a record of every transaction. Pay your bills online, make purchases with a debit card (or better yet, a credit card that you pay off every month), and minimize cash spending. The numbers don't lie. Look at where your money goes, and evaluate whether you’re getting what you pay for. Once you've taken a hard look at where your money goes, there are plenty of ways to cut costs. You may even decide to downsize your home or car to free up more cash for savings.
Increase Your Income
The flip side of cutting costs is increasing what you bring in, and there are several ways to do it. Unfortunately, it takes time to earn more money, but hopefully, you won't need to do it forever.
One quick way to earn more is to add part-time work. Taking on another job for a few months or so might give your bank account the boost it needs. Or ask your employer for overtime hours. You may even look into negotiating your salary or switching jobs to secure a higher paycheck, especially if raises have been paltry or nonexistent at your current job. Keep improving your skills to demonstrate your value to employers if you'd like to move up the career ladder.
In the digital age, you can easily make some extra money with the click of a finger. Whether it's selling old items laying in your home or using your craft to increase your savings, consider these apps to get you there.
If you need a more substantial change and don't want to depend on bosses to pay you what you're worth, start your own business. As an entrepreneur, you’ll have more control over your own destiny, as well as more upside potential. You can manage your risk by starting part-time on the side, and then transition to a full-time gig as things pick up.
On top of working smarter as well as harder, increasing your income can also include selling some belongings, or even renting out a room in your home on Airbnb.
Put Your Money to Work
Once you’ve built up your bank account, start earning more on the money you’ve saved. This won’t make or break you financially, but why leave cash on the table? Make sure you’re earning a competitive rate on your savings, switching to a high-yield savings account if necessary, and use certificates of deposit (CDs) and money market accounts to earn more interest.