Saving a lot of money is like trying to run a marathon.
If you dwell on how long the race is, you might not even get off the couch. But if, instead, you focus on putting one foot in front of the other and running one mile, and then two miles, and so on, suddenly a marathon doesn’t seem quite as intimidating.
Try to think about your finances in the same way.
Minor changes that you make right now can have a major impact on your long-term financial security, according to Stephany Kirkpatrick, senior director of financial planning and a Certified Financial Planner™at LearnVest Planning Services. Below, she shares eight quick and easy tips that can help you slowly and steadily stash away cash—and we profile real people who’ve put them to the test, much to the benefit of their bottom lines.
1. Open a separate savings account: Simply put, you want to keep your checking account and savings account at two different banks.
Erica Zidel, 31, of Boston, Mass., who runs the babysitting startup SittingAround.com, says that this is the single best thing she’s done to save money. “I kind of forget that I have the savings account, so I’m not tempted to dip into it,” she says. “Since doing this five years ago, my savings have grown 400%.”
Kirkpatrick agrees that the out-of-sight/out-of-mind mentality is helpful—plus, it usually takes two to three days to access money from a separate savings account, so you probably can’t spend it as impulsively.
2. Set up an automated transfer: It’s easy to promise yourself that you’re going to transfer a certain amount of money into savings each week or month, but following through takes an awful lot of time, energy and discipline. Take the process out of your own hands by either asking your company to regularly deposit a portion of your paycheck directly into your savings account (that’s ideal, says Kirkpatrick, because you never even see the money) or asking your bank to regularly transfer a certain amount of money from your checking account to your savings account.
“My husband and I set up an automatic transfer with our bank between our checking and savings accounts, ” explains Kendal Perez, a 28-year-old marketing manager at Kinoli Incorporated in Fort Collins, Colo. “Each week, $50 is transferred, and we don’t typically miss it. That has helped us build an emergency fund and cover costs like car insurance and vehicle registration.” And do it frequently: “If you transfer from checking to savings, I recommend weekly transfers, because they keep your checking account more level. You won’t feel a huge dip once a month,” says Kirkpatrick.