Saving money when you’re young is a very important financial lesson. As all good habits should begin at an early stage, saving is no exception. This is perhaps one of the most important things you can do to boost your financial well-being. The average consumer spending in America is $50,638 per annum–an amount that is spent on necessities. The huge expenditures come from the households with a gross annual income of $63,096 on average. The increase in the number of vehicles and the number of homeowners with unpaid home loans are the two primary reasons for the decrease in the savings rate among Americans. Have a look at some facts associated with savings and how frugal budgeting tips can boost your savings ratio.
Some pain-free ways of saving money
The biggest problem among Americans is that we’re unaware of our own financial status and this proves to be the main reason for the rising financial problems in our Nation. We are not aware of what we earn, where our income is going and how we can boost our income in order to increase savings.
Here are some tips that may help you save more.
Get your spending habits under control: The very first step that you must take in order to boost your savings is to get your spending habits under control. You can easily use budgeting software that will assist you in creating a budget in accordance with your credit card debts, investment accounts and other financial obligations. Creating a budget is the only way to control your spending.
Create an FSA: If your employer offers a Flexible Spending Account (FSA), you can save some of those pre-tax dollars and utilize it to make immediate medical bill or credit card bill payments. Such a flexible account–provided by most employers in America–helps you save those extra dollars on state income taxes, Social Security and some federal taxes.
Increase your insurance deductibles: If you’ve got health, life and auto insurance policies, consider increasing the deductibles. Raise the deductibles in order to decrease the premium rates. According to a survey, most Americans complain of spending a large amount in paying off their insurance premiums.
Restrict the usage of credit cards: If you’re carrying multiple credit cards, you will never be able to boost your savings by this habit. Most experts are of the opinion that consumers should spend more with cash than on credit. Lock up your credit cards and go shopping with cash. Keep a card only for emergency use.
Types of savings accounts that can help you accumulate your savings
A savings account is an easy way of accumulating your money. If you understand the types of savings account and how they work, it can benefit you in more than one way. Have a look at the brief description of various types of savings account.
Passbook account: If you open a passbook account, you will get a booklet with which you can record all the deposits, withdrawals and the interest. Low fees are usually associated with such accounts.
High-yield savings account: With this type of account, the higher the account balance, the higher the interest rate the bank will pay you. Keep in mind, you will not be allowed to use checks with this particular type of account.
You must always consider using a savings account whenever you plan to set aside a particular amount of money for some fixed purpose. You can also tie your savings account to your checking account so that you have a back-up in case you require a money transfer.
With the rising health care and transportation costs in America, it is very crucial for Americans to adopt the habit of saving money and leading a frugal life. According to a survey, 41% of Americans save regularly, but the major part of the population has still to adopt this noble habit in order to facilitate the process of paying off their financial obligations.