How Much Money Should You Save Each Month?

Six Simple Tips for Increasing Your Savings

Deciding on the perfect amount to save each month can be difficult. Many financial experts recommend allocating 20% of your income toward long-term savings. However, there is no one-size-fits-all way to save. Life’s expenses ebb and flow, which will impact the amount you are able to save throughout the year.

Try these six ways to set aside more funds and make your savings grow faster.  

Start Negotiating

The easiest way to save more is to earn more. Begin researching salaries in your field to find out whether you are adequately paid according to your title and work experience. Arrange a time to  speak with your manager regarding your recent work successes  and the salary ranges of professionals in similar positions in your region.

If a salary increase isn’t in the cards with your current employer, you may want to look at what other companies in the area are offering their employees. In addition to a potentially higher salary, a new career opportunity might also offer a higher 401(k) match percentage or better health benefits, leaving you with hundreds or possibly thousands in extra savings each year.

Lower Your Bills

What are you paying for cable and internet? Companies draw new customers in with introductory rates that often skyrocket after a few months. You may be able to  get your utility company to lower your rates simply by discussing rates from other carriers. Call up your own carriers and competitors to find the best rates available to you.  You may also want to consider eliminating cable altogether and relying solely on streaming services.

Reducing the cost of your cable, internet, or cellular service can free up extra money each month. Take the money you save from negotiating the price of these services and automatically deposit it into a savings account. Since you were already used to living without these funds, you will be able to put more cash away each month without impacting your budget or your standard of living.

Reduce Debt

It may seem obvious once you think about it, but  eliminating high-interest debts can help you put more away in savings. Start by focusing on paying down the debts that are truly hurting you financially.

If you are carrying a balance on a credit card that charges a 15 to 20% interest rate, you could be losing hundreds of dollars annually that could otherwise be going into your savings account. Look into transferring your high-interest balances to a card that offers an introductory rate of 0%. This will give you time to pay off your debt without paying interest.

Once you have eliminated your high-interest credit card debt, you can begin to pay down larger items such as your home mortgage, car loan, and student loans. While some of these provide tax incentives for paying down interest, having little to no debt will allow you to save a larger portion of your income in the immediate future.

Expand Your Retirement Savings

If you aren’t already, you need to take advantage of any 401(k) program that your company offers. These retirement plans allow you to save pretax dollars and may also provide matching incentives.

Beyond employee sponsored programs, there are other retirement savings options available to you. Look into an individual retirement account (IRA). A Roth IRA allows you to save after-tax dollars. One of the benefits of having a post-tax Roth IRA account is that it allows you to withdraw your money in retirement without being taxed on those withdrawals.

Having a balanced retirement savings strategy gives you more ways to maximize your savings today. It also provides you with future savings options when the time comes to retire.

Balance Your Children’s Expenses

It can seem impossible to save when you have children. The USDA estimates that it will cost $233,610 to raise a child born in 2015 – without the cost of a college education.^[i]  While that amount may vary based on your family situation and location, the cost of raising a child will inevitably put a big dent in your ability to save.

While it can be hard to save, there are ways to make the most of the money you are able to set aside for your children’s future. Many states offer an educational 529 savings plan that allows families to save money for their children’s college education.^[ii]

Similar to saving in an IRA, a 529 college savings plan opens an investment account that you can deposit funds into as your children grow. When they are ready to attend college, you can then use the funds to pay for higher education expenses without being subject to federal income tax on your earnings.

Some states also offer a 529 plan that allows you to prepay for your children’s education years before they are ready to enroll in university. Do your research and find the college savings account that allows your funds do the most for your family.

Let Your Savings Work for You

Setting up automatic transfers and separate accounts for each of your savings goals can help propel your savings forward. One of the key components to making the most of your savings is ensuring that you are earning a high interest rate on those accounts.

Shop around to find the best rates and the lowest fees to reach your financial goals faster. The  Premium Money Market  and  High Yield Savings  accounts available from UFB Direct offer among the highest interest rates in the nation. Make your money work hard for you. Open a UFB Direct account today and start saving.

For further information about any of the products available from UFB Direct, please contact us by phone at 1-877-472-9200 or by email at customerservice@ufbdirect.com.

Footnotes

[i]   "The Cost of Raising a Child," US Department of Agriculture, January 13, 2017

[ii]  "An Introduction to 529 Plans," US Securities and Exchange Commission, December 4, 2017