One thing Americans don’t do enough of is save. However, without a good financial cushion, most people are forced to go into debt to pay off unexpected expenses. If you have not been living within your means and want to start building a stronger nest egg in 2016, here are five proven strategies you can use to double your savings.
1. Pay Down Your Debt
If you want to have money to save, you first need to eliminate your debt. If you don’t, a good portion of your income will go towards paying interest on borrowing someone else’s money. Sadly, many Americans are never able to completely escape from the grasp of crushing debt. According to Forbes, the average US household owes $15,706 to credit card companies. A good strategy for paying off debt is to start with the bills with the highest interest and pay down the balances as quickly as possible.
2. Strive for Saving 50 Percent after Taxes
If you really want to double or even triple what you have in savings, you need to be disciplined. One great goal to strive for is saving half of your paycheck after taxes. This may seem more than what most people can manage with their money. However, if you really try to live within your means, it is very possible. This will require very strict budgeting and a slashing of leisure and luxury expenses.
3. Track Your Expenses
However, to achieve that goal successfully, you need to know exactly what your weekly and monthly expenses are. This way, you’ll know what you can cut to increase your savings. Track all of your expenses for at least three months. Place everything you spend money on in a spreadsheet so you can more easily record and add the figures. Once you have tracked everything, give the entries on your spreadsheet a closer look and consider which expenses you can really do without.
4. Learn How to Cook
According to Bloomberg, in 2015, Americans spent more on eating out than they did on groceries. Overall, this just doesn’t make smart economic sense. Restaurants do not charge customers the fair market value for food. Instead, they also charge them extra to pay for labor, electricity, rent and a little bit for profit. If you want to bring those prices down, you need to shop at a grocery store that does high volume business. Learning how to cook your own food can be a valuable experience. It can allow you save money and eat healthier as well.
5. Expand Your Retirement Savings
While it’s important to have a good amount of cash in reserve in savings accounts, you should also be saving for your eventual retirement. Place a good chunk of your savings into a retirement savings vehicle such as an IRA or a 401k plan. If you already have such an account, increase your contributions. If you have a plan with your employer, your employer should match your contributions. This can quickly add up.