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In times of inflation, having a good strategy for saving can cushion the rapidly decreasing spending power of your money. Unfortunately, in times of inflation, it’s harder to generate a little extra because the earned rates on savings are lower than the inflation rate. Money is losing its power, so we all feel the need to be more well-informed and change saving strategies to keep up with the current pace of economic conditions. Understanding interest rates and investment opportunities can be crucial for growing your money with a savings account typically involving earning interest on your deposited funds. While savings accounts generally offer lower interest rates compared to other investment options, they are considered safer and more accessible. 

 

There are many options out there to stash your cash. But learning the differences, advantages, and drawbacks takes time. There are many things to consider, for example, the differences between money market vs. traditional savings accounts, but your spending habits should also fall under your radar.

In this article, we are going to explore some strategies for better budgeting, growing your money, and getting control over your finances. Join me. 

Setting good habits and getting rid of the bad

Most people spend more than they save. That's a fact. But also, most people are not very well informed about the benefits of starting to save. Money is somewhat abstract, and we don’t always feel the “weight” of its value, only when we’ve already spent too much. Still, budgeting and saving are crucial for financial stability and long-term success. Starting to save is sometimes only a matter of a perspective shift: if you think about it as an opportunity, you’re one step closer to start doing it. Here’s where you can start immediately. 

 

Track your spending

Keep a record of all your expenses. Mobile apps, spreadsheets, paper and pen, or any dedicated budgeting tool are good. This helps you understand where your money is going and identify areas where you can make adjustments. 

Create a realistic budget

Based on your income and expenses, establish a budget that aligns with your financial goals. Allocate funds for essential needs, savings, debt repayment, and other spending. It's important to be realistic and flexible when planning. It’s also advised to set aside money for unexpected expenses.  

Reduce unnecessary expenses

Review your expenses and identify areas where you can cut back. Look for unused subscriptions, and memberships. Rule out impulse purchases. Small amounts can add up to significant amounts over time. 

Prioritize savings and set financial goals

Make saving a priority in your budget. Aim to save a certain percentage of your income every month. Treat savings as non-negotiable, like a bill for example. Defining short and long-term goals can also help to start building. Paying off debt, saving for a down payment, or building an emergency fund are typical goals to start with. Having defined goals can build motivation and set the course for your budgeting efforts. 

Be patient and stay motivated

Developing better budgeting habits takes time and patience. Keep your financial goals in mind at all times. Remind yourself of the benefits of budgeting and saving from time to time. This can help you stay motivated. Also, periodical reviewing can help to perfect your strategies, and improve your weak points. 

Choosing the right savings account

Take the time to research and compare different savings accounts to find the best option for your goals and also understand how savings accounts work. Different banks and financial institutions offer different interest rates and account features. Several types of accounts exist with specific functioning patterns suitable for different money management approaches. 

Consider opening a high-yield savings account

They generally offer higher interest rates compared to regular savings accounts. These accounts may have certain requirements, such as minimum deposit amounts or maintaining a minimum balance. Make sure to review the terms and conditions (yes, you’ve read that right) to avoid future surprises and get the most out of your account. 

Look for accounts with compound interest

Some savings accounts offer compound interest. Compound interest allows your money to grow not only on the initial deposit but also on the accumulated interest. Over time, the small amount won on the compounding effect can add up to a nice sum. 

Do a review periodically

Periodically review your savings account to make sure it still meets your needs. As your financial situation changes, you might find that other types of investment options offer better returns. Certificates of deposit (CDs) or money market accounts can be great solutions. However, those usually require a higher amount of money to open. Maintaining a specific minimum balance is also asked. Some money market accounts don’t require these, but in turn, those accounts have much smaller returns on interest rates.  Assess your goals, risk tolerance, and the current financial landscape to determine if other options are more suitable for your money growth. 

Build an emergency fund

Consider using a traditional savings account for an emergency fund. Having an emergency fund protects you from dipping into your long-term savings. Or worse, ending up in debt during financial emergencies. Traditional savings accounts typically provide easy, untaxed access to your money. It’s advised to have money stored in an account that allows quick access and there are no limits on withdrawals. While you can’t reap the benefits of the interest rates so much on your emergency savings, you win by not touching your other savings and salvaging the interest rate that would be lost if you touched it.

Stay informed

Interest rates can fluctuate over time. Try to stay informed about any changes in the interest rates offered by your bank or other financial institutions. If you find a better rate elsewhere, you might even want to consider switching your savings account to take advantage of higher rates. However, chasing high rates is not the only strategy and is not always the best one. 

The bottom line

You can use simple strategies to grow your money. Implementing lifestyle changes for better budgeting is a good start. Keeping track of your spending will instantaneously make you more conscious of the “leaks.” As a next step, staying informed about different kinds of accounts is a start. Consider high-yield accounts for higher returns, or take advantage of compound interest to boost your savings. Make regular deposits and manage your expenses wisely to save more. These small steps and reviewing your strategies periodically will set you up for the long-term growth you desire.

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