Tips for how to save money from your salary
You know savings are key to your financial future. But if you're left wondering how to save money from your salary, you're certainly not alone.
After tackling your rent, debt, and utility bills, you may have little left over to set aside for a larger purchase or a rainy day.
You can gain control of your salary and make it work harder for you. Try these steps.
1. Assess Automatic Payments
Less than 10% of Americans pay all their bills online. But sign up for a service like Hulu or Amazon Prime, and you're encouraged to use monthly deductions to pay your fees. That money slips out of your account unnoticed, and you may be paying for things you don't need anymore.
Download your monthly bank statement and search for:
- Repetition. Do you need both Hulu and Netflix, or could you get by with just one service?
- Fees. Are you paying more now than you were when you started? Many companies offer a low introductory rate and when a specified timeframe has passed, the cost rises. You may be paying more than the product is worth to you.
- Usage. Are you paying for something you no longer use at all? For example, if you're still allowing monthly deductions for satellite radio in a car you no longer own, you're wasting money.
The amount you'll save may seem small. While $7 per month may not seem like much, over time, those dollars can add up.
2. Track Your Spending
It's hard to control accounts you don't understand. Watch your funds carefully, and you could spot patterns ripe for adjustment.
Common spending pitfalls involve:
- Takeout. Do you grab fast food or other quick food out most days?
- Delivery. Do you pay extra for delivery when you’re tight on time?
- Convenience transportation. Are you often late and have to grab an Uber to get to work on time?
Use Current and when you enable notifications, we'll notify you with a push notification every time you spend money. We'll also give you insights on where you spend your money each month. The data could help you understand just where your money goes every month.
You may decide your spending is justified. For example, one blogger reports that he spends $2,300 per year on a Starbucks habit, and he thinks that expense is justified. But you may find that cutting back on some common spending habits could give you more money to reach your financial goals.
3. Sign Up for a 401k or IRA
It's hard to save money when you can pull funds out of savings at any time. Retirement accounts are different. Slide money in, and you'll be charged for removing it again.
Less than half of all American workers participate in a retirement savings plan. If your company doesn't offer a 401k, it's much harder to save for retirement. But if you're eligible to participate, popping money in this account could be a wise and painless way to save.
Money comes out before taxes are assessed, so you’ll save. And deductions are automatic, so you won’t be tempted to spend before you save.
4. Use Automated Banking Tools
Make a savings habit automatic, even if you don't have a 401k or IRA, with tools from your bank.
At Current, we offer Saving Pods. Create pods based on your savings goals for specific purchases and you can automate savings and round-ups with every purchase.
5. Cut One Major Expense
The quickest and easiest way to save money from your salary is to look for one major budget item you can reduce or eliminate altogether.
For example, the average American household spends $554 per month on a new car payment. Rather than setting aside this money each month, you could:
- Buy a used car. Do you really need the latest and greatest model? Or could a car that's older do the job just as well? Older cars can come with higher maintenance fees, but shop with care, and you could find a beauty that runs perfectly for a much lower overall cost.
- Choose public transportation. Give up your car for a year or two, and invest in a bus pass instead. You'll save the entire amount of your car payment. While travel can become slightly less spontaneous, you'll save a great deal of money.
- Keep your car for years after you've paid it off. Financial experts explain that most of us move right to a new car when our old one is paid off. Keep the one you have for years after you pay it off, knowing that you're saving a great deal on payments.
This is just one example of a major expense families could cut. Yours could involve housing or clothing or grocery bills. Examine your spending carefully, and identify just one thing you could change to help you save more money from your salary.
6. Ask for More Money
It's easier to save when you have more to begin with. If you're in a position to negotiate for a higher salary, this is one of the most powerful ways to save money from your salary.
Consider negotiation when:
- You're applying for a new job. Less than half of all workers ask for more money when they're starting a new position. Requesting even a dollar an hour more could mean a lot more money in your account every month.
- You're ready for a promotion. You've worked hard in your position, and you could do more in a leadership role. Explain that to your boss, and ask for a bit more money in return.
- You've done something amazing. You've made a series of customers very happy, or you've saved the company money. Point out how you contribute, and ask for a bit of something in return.
It can be uncomfortable to toot your own horn and ask for the compensation you deserve. But advocating for yourself is a smart money management technique.
7. Use Cash Back Programs
Make your money do more with programs that reward your purchases. Set aside the funds you receive, and watch your savings grow.
At Current, we offer up to 15x points for our Premium members when you make purchases with participating merchants. Redeem those points instantly for cash in your account, and move the funds into your Saving Pod. It’s a quick and easy way to save more. Locate all points locations near you on a map directly in the Current app. You can earn points just for making your everyday purchases at merchants like Rite Aid, Subway and True Value.
Save Money With Current
We'd love to tell you more about how our programs help consumers just like you save more money from their salaries and achieve their financial goals.
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Current is a financial technology company, not a bank. Banking services provided by Choice Financial Group, Member FDIC.
Question of the Day: How Do Most Americans Pay Their Bills: Online, Automatic, Or Other (By Phone/By Mail/In-Person)? (January 2019). Next Gen Personal Finance.
My Daily Starbucks Habit Costs Me $2,300 a Year. Here's Why I Refuse to Stop. (June 2019). CNBC.
How Many American Workers Participate in Workplace Retirement Plans? (July 2019). Pension Rights Center.
What's the Average Car Loan Payment? (October 2019). Experian.
The No. 1 Payment Killing Your Wealth. (October 2018). Forbes.
Salary Negotiations Aren't Happening as Much as You'd Think. (February 2018). SHRM.
11 Words and Phrases to Use in Salary Negotiations. (January 2019). Glassdoor.
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