American ExpressAmerican ExpressAmerican ExpressAmerican ExpressAmerican Express
United StatesChange Country

10 Ways to Be a Better Saver

September 18, 2019

Trying to save for your future is like trying to lose or maintain a healthy weight. You always start with good intentions. But it’s hard to have the discipline to keep on a diet, or follow good savings habits, when fattening foods call out to you—or when that fancy car, home, or high-end restaurant that you may not really be able to afford offers such a tempting alternative for your money over a savings account.

 

Despite all that, most of us never give up striving for health and fitness. It’s never too late to start being a smart saver. So here are some approaches that could help make a better saver out of even the chronically savings-challenged!

 

1. Tracking Your Expenses

 

The first step in figuring out how much you could be saving usually is to understand how much, and on what, you’re spending your money. You can start by reviewing account statements from your checking account and credit cards and categorizing expenses into key groups such as rent, utilities, debt payments, food, entertainment, clothes, subscription services, etc. It is often useful to look at the variable expenses like clothing and food to find out where there may be room to cut.

 

If you’re willing to log your expenses and put in the effort to track them in real time, there are apps like Mint and You Need a Budget that can help.1

 

2. Make A New Plan, Stan

 

Now that you feel a bit more in control of your life by understanding your expenses, you could make a savings plan. Those with a savings plan are twice as likely to save successfully.2

 

There are lots of ways to create a savings plan. But for the savings-challenged, you might need some help. The Consumer Federation of America is offering assistance by asking you to take the America Saves Pledge . They’ll help you set a goal, create a plan, and keep you motivated with advice, tips, and reminders.3

 

3. Autopilot: Regular Transfer To High Yield Savings Account

 

A great way to save is not to make regular savings decisions at all. The secret here is to use the plan in step two to figure out what portion of your regular paycheck you need to put into a checking account to pay bills and other expenses, and what percentage you can comfortably put aside for savings.

 

Then, you may be able to have your employer divide your paycheck into separate percentages to go into your checking and savings accounts. Your employer may have a form to do this. If not, it can’t hurt to ask.4 Using automated transfers to generate regularly recurring savings deposits reverses the burden of action—you have to act only if you prefer to save for a given period.

 

4. Choose Your Savings Account Wisely

 

If you’re keeping all your money in a checking account and earning no interest or a paltry percent, you could be missing out on the opportunity to earn more interest and save more. In fact, the average interest-bearing checking account delivers only 0.07 percent annual percentage yield (or APY) compared to the better high yield savings accounts that generally offer around 2 percent APY.

 

If you’re willing to tie up your funds for a longer period, say a year or two, you could be earning even more in a Certificate of Deposit –  rates for CDs maturing in two years are generally around 2.5 percent to 2.9 percent APY ("Not Saving Enough For A Rainy Day? High Yield Savings Accounts and CDs Can Help").

 

5. Take a Nip Out of Your Credit Card Debt

 

Start with a small goal of reducing your credit card debt by $1,000. A $1,000 debt reduction could save you $150-200 a year in interest, or more if that amount caused you to pay penalty rates.5

 

6. Reduce Interest

 

Reducing the interest you pay on credit card or other debt is one of best ways to save money. You can create a plan to pay off your debt. Try calling the credit card company to see if they’ll give you a cheaper interest rate to keep your business. Or transfer funds to an interest-free credit card to save while paying off your debt.6

 

7. Pay With Cash or Check

 

Forcing yourself to pay for everyday expenses in cash or by check could slow down the impulse to spend and get you to think twice about what you really need instead of what might be nice. And research shows that you spend 20 percent more when using a credit card because it is “less painful” than pulling out cash to pay or taking the time to write a check.7

 

8. Look Into Online Savings Accounts

 

In looking for the best place to keep that hard-earned money you’re saving, check out online savings accounts vs. those offered by brick-and-mortar banks. Online savings accounts generally offer a better interest rate than traditional brick-and-mortar banks8. And check to make sure your account doesn’t have onerous bank fees.

 

9. Trim Your Subscriptions

 

Do you really need subscriptions to all of those premium cable channels AND three or four online streaming services? Did you remember to cancel your old music subscription service when you switched to your new one? And what about all those other “free” offers that you started to pay for after the introductory phase ended? Paying an extra $50 or $100 a month on services you don’t really use can really add up.

 

10. Set Aside Time To Save

 

Finally, whether it’s implementing these savings ideas or others from articles around the web, try spending just one hour a month to put these changes into action. You may be able to see results sooner and feel better about your ability to save and get more control over your expenses—and your life.

The Bottom Line

 

Many of us find it really hard to put into practice the savings techniques we know we ought to follow. The good news is that just taking small steps, seeing incremental improvements, and spending a small amount of time on a regular basis to monitor your results, can lead to substantial savings.

Related Articles

 

 

 

 

Accounts offered by American

Express National Bank. Member FDIC. Each depositor is insured to at least $250,000.

Learn More from FDIC.gov

*The Annual Percentage Yield (APY) as advertised is accurate as of . Interest rate and APY are subject to change at any time without notice before and after a High Yield Savings Account is opened.

 

For a CD account, rates are subject to change at any time without notice before the account is opened. Your rate will be fixed on the business day‡ we receive your completed application, provided we receive your deposit within 30 days after your application is approved. After a CD is opened, additional deposits to the account are not permitted. Early CD withdrawals may be subject to significant penalties which could cause you to lose some of your principal. Please see the Deposit Account Agreement for additional terms and conditions and Truth-in-Savings disclosures.

 

**The national average APY is accurate as of October 26, 2020, as published in the FDIC's Weekly National Rates and Rate Caps; average rate used is for deposits under $100,000.

 

†You may make up to nine (9) withdrawals or transfers out of your High Yield Savings Account during a monthly statement cycle. Read More in FAQs.

 

‡For purposes of transferring funds, business days are Monday through Friday, excluding holidays. Transfers can be initiated 24/7 via the website or phone, but any transfers initiated after 7:00 PM Eastern Time or on non-business days will begin to be processed on the next business day.

 

♢Calculations are estimates of expected interest earned. Actual results may vary, based on various factors such as leap years, timing of deposits, rounding, and variation in interest rates. The first recurring deposit is assumed to begin in the second period after any initial deposit.