I Write About Savings for a Living. 7 Insider Tips I Share With My Friends

3 weeks ago 10

Saving is one of my favorite topics because I know first-hand the value of having a financial cushion and the stress that creeps in when you don't. As someone who's written about money for more than a decade, I understand that saving isn't a natural impulse for everyone. However, you can hone your savings skills by using some key tools.

I appreciate the wisdom behind tried-and-true advice, like "set aside three to six months of expenses in an emergency fund" and "put your money in a high-yield savings account." These saving strategies help me set a foundation for larger goals such as buying rental properties.

But reviving a savings strategy on life support won't happen without finding the cash to set aside. Use these seven tips to kick your savings into high gear.

My top savings tips

Developing a saving habit isn't complicated, but it won't happen by accident. Use these seven tips to supercharge your savings.

1. Boost your budgeting skills

Learning to use a budget is the best way to give yourself a raise without getting a second job. With a budget in hand, you can make smart decisions on how to use your money each month, which can free up more for savings.

You may not stick to your budget on the first, second or even third attempt. Life happens, and unforeseen incidents can throw you off track. The key is to learn from mistakes, make adjustments and try again.

If you need help getting started, many banks and credit unions -- such as Alliant Credit Union -- offer financial services at no extra cost to customers and members. Budgeting apps can also help analyze your spending patterns to provide helpful recommendations.

2. Switch to percentage-based savings

Automating transfers to a savings account takes one more task off your to-do list. But there's another simple trick you can use to make sure your savings grow with you over time.

Whenever possible, send a percentage of your income -- rather than a fixed amount -- to a savings account each time you're paid. If your pay increases, the amount you put away will increase with it.

For example, if you take home $1,000 each pay period and deposit 5% to a high-yield savings account, $50 from each check will be transferred to savings. If your pay increases to $1,500, you'll add an additional $25 per pay period to savings without lifting a finger.

Pro tip: Don't feel bad if you start small. If, after working through your budget, you can spare only $5 or $10 a month for savings, automate that. Building a savings habit is more important than the actual amount you can save when you start out.

3. Open a secondary savings account

Even if your bank offers a full suite of banking products and services, opening a secondary savings account not directly tied to your primary bank is a simple, yet effective way to grow your savings. Why? Your savings account stays out of sight and out of mind.

Banks such as Marcus by Goldman Sachs and BMO Alto are great options for secondary savings accounts. These online-only banks offer competitive rates but don't provide ATM access to your cash. You'll rethink your spending priorities if you can only access your money using a wire transfer that can take up to two days.

4. Shop around for a savings account

Banks with household names offer convenience, a sense of stability and innovative banking tools. But they generally don't offer the best rates on savings accounts. As you look for a secondary savings account, compare features from smaller or online-only banks to find the best option.

Keep these factors in mind as you decide which type of savings account to open:

Rate: There are plenty of accounts that offer an annual percentage yield, or APY, of 5% or more. That's more than 11 times the national average of 0.46%.
Fees: The best savings accounts don't charge monthly fees that can eat into your interest earnings.
Cast a wide net: The best APYs are generally found at online-only banks, but a few big banks, such as Capital One, offer great rates and branches in some parts of the country.
Federal deposit insurance: Confirm that the bank or credit union is insured by the Federal Deposit Insurance Corporation or National Credit Union Administration. This protects your money up to $250,000 per person, per institution, if the institution fails.

5. Score some free money

You can earn a welcome bonus of up to $500 or more when you open a new savings account with some banks. There are often strings attached, and it can take up to 90 days or more to receive the cash. But it's essentially free money that helps you reach your savings goal faster.

A welcome bonus shouldn't be the only reason you choose a particular savings account. But it can be the cherry on top if you're comparing several similar accounts. When evaluating a welcome bonus, avoid banks that charge monthly fees that can work against your savings efforts. Also steer clear of any bonus with stringent requirements. And avoid account churning, or opening and closing accounts in rapid succession. You could run into early account closure fees that chip away at the benefits of a bonus.

6. Take advantage of savings tools

Banks and credit unions offer a wide range of savings tools to help establish your savings habit. Ally's savings account -- a CNET Editors' Choice pick -- raises the bar for helpful savings tools.

Ally's Surprise Savings feature analyzes your spending patterns and automatically transfers money to a linked savings account to help build your savings. How much it transfers is based on an analysis of your spending patterns -- it determines an amount that is safe to save. It also allows you to organize your savings goals into savings buckets. This compartmentalizing can help you visualize your savings progress and stay focused.

Zynlo Bank offers a roundup and match feature. The bank rounds debit card purchases up to the nearest dollar, matches the roundup amount and deposits the total into your savings account.

7. Understand your money scripts

Your early experiences affect your beliefs about money. These beliefs, known as money scripts, play a significant role in how you approach your finances. These scripts can be passed down from your parents or influenced by the culture you grew up in.

These scripts can be divided into four categories:

Money avoidance: You try not to think about money because you might equate it with negative qualities such as greed, corruption or evil.
Money worship: You believe the solution to many of your problems is having more money and might tend to spend money to buy happiness.
Money status: You link net worth with self-worth and place significant value on material possessions.
Money vigilance: You're a saver who usually spends only what you can afford.

These beliefs may be sabotaging your savings efforts. We talked with experts to understand more about how to sidestep some of these psychological barriers. You can see their tips here.

The important thing is just getting started

None of these tips for becoming a better saver work unless you get started. You can open a savings account in minutes online or through a bank's mobile app. And you don't need a ton of money to start building a healthy savings habit.

A savings habit can lead to financial progress in other areas too. Once you've achieved a savings goal, you may decide to tackle other goals, such as paying off debt or learning to invest.

If saving doesn't come naturally, you may not become a saver overnight. However, being intentional about making use of the tools that will help you turn over a new financial leaf will make all the difference.