5 Small Money Moves That Make a Big Savings Impact

Becoming successful in finances can be difficult for many, but it does not have to be that way. To stop living from paycheck to paycheck, look at the little details such as the minor decisions made every day before being able to see how it all impacts the bigger picture. This means taking a look at daily expenses, including the amount spent on meals, transportation, and other minor things when going out. 

Those little spendings can build up without a trace, and it can leave quite a dent to people’s monthly budget if they are not keeping an overview of all their expenses. In that regard, it may take some effort to build their wealth, but the journey to financial wellness does not require drastic lifestyle changes. All it takes are small, deliberate steps to create healthier habits, some of which are outlined below:

Tip #1: It is better to save a little than none at all

Many people plan to save a big chunk of their money — fluctuating anywhere between 20% to 40% of the salary — but in reality, most end up spending more than they intended. When that happens, the little money left does not go straight to their savings as people find it too small to make a difference. 

However, rather than blowing it all, that extra $10 or $20 they feed to their piggy bank will matter in the long run. Of course, it is preferable to save more, but practicing consistency is one way to develop a habit of saving. There is no doubt that the 1% of their gross income will build into much more value over time.

Tip #2: Track each month’s spending

Many may think that they are on top of their expenses, but with electricity and utility bills, groceries, and everything in between, it may be surprising to discover how their money is spent. In that regard, the best way to start a habit of saving is by figuring daily expenditures. Doing so will help individuals keep track of their budget and pinpoint areas where they can cut back on costs. It is not necessary to have an elaborate spreadsheet to do it; there are quite a number of apps and online tools available to help one keep track of their finances swiftly and conveniently.

Tip #3: Switch to an Index Fund

In order to maximize the return from mutual funds, smart investors switch to lower fee funds or an index fund. It is a low-cost, no-fuss way to invest money, as they get an excellent selection of stocks without having to purchase each one individually. Because investors are only holding shares in a given index, management fees tend to be low, allowing them to have higher investment returns for individual investors. Be sure to seek the advice of a professional financial adviser before making the switch.

Tip #4: Bump Up the retirement savings plan

This is similar to point #1, where saving even 1% of an income each year can make a significant impact on the overall savings. It may feel sluggish at first, but little tweaks and small additions like these can pay off big years down the road.

Tip #5: Move any savings to an investment account

If enough cash has been accumulated in a person’s savings account, leaving it to sit in a brick and mortar bank can only benefit them by about 0.01% to 0.09% interest rate versus a high-yield savings account, which can help them earn between 0.87% to 2%. For instance, if they have $50,000 in savings, transferring their money to an online savings account can add an extra $1,000 or more each year.

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