Nine Tips for Feeding Your Savings Account

It's not as exotic as a hot investment tip, and it's not as easy as letting the stock market do all the heavy lifting, but finding ways to set aside more savings seems the only sure way these days of building your retirement nest egg.

Implicitly or explicitly, every retirement savings plan has a certain assumption about an investment return--how much growth and interest will help magnify your savings. Now we are squarely in an era of diminished expectations--the stock market has delivered a dozen years without growth, and savings account interest rates are in the low single digits. Clearly, return assumptions need to be taken down a peg, and when you do that, there's no other way to build your planned nest egg back up but to save more.

Fortunately, there are several ways you can feed your savings account.

Tips for Feeding Your Savings Account

Here are some ways you can increase your personal savings rate. Some of them may seem minor, but if you try a few new things, it will start to add up:

1. Create a spending plan that matches your retirement savings plan. Work backward from retirement, and connect all the dots along the way. This means figuring out how much money you will need to retire, then how much you need to save each year to get there, and finally, how much you can afford to spend and still reach your savings target.
2. Use coupons--but only after you've already decided what you want to buy. Don't buy something just because you see a coupon for it. Decide what you need, and then use Internet resources to track down the applicable coupons.
3. Replace air conditioning and heating filters. This is a simple step you should take at the start of the corresponding seasons, because it can significantly reduce your energy bill.
4. Comparison shop. In the past, going from store to store to compare prices may have cost you more in gas than it saved you on the purchased item. Today though, you can look at retailer's Web sites to compare prices before you leave the house.
5. Consolidate laundry loads. If you live in a household where people do separate laundry loads, consider taking turns doing one big load. It will give everyone a break, and save energy dollars.
6. Never go grocery shopping while hungry. Doing so transfers weight from your wallet to your waistline.
7. Grill outside in the summer. What's not to like? It's fun, it tastes good, and it also saves your air conditioner from having to beat back the heat of the oven.
8. Avoid extended warranties. These are big money-makers for retailers--so that means most aren't good deals for consumers.
9. Move money into your savings account regularly--by automatic deposit, if possible. This is the key to making this all pay off. If you leave money sitting in your checking account or your wallet, you'll find ways to spend on one thing what you've saved on another.

On top of taking steps to increase your personal savings rate, don't neglect to shop for the best interest rates on savings accounts. Just because rates overall are low doesn't mean you should settle for anything less than the highest rate available.

 

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