It’s no secret that saving money is hard. The average American household has less than $1,000 in savings, and over half of you have less than $100 saved up. That said, there are some simple ways you can improve your finances, and one of those is by opening a savings account at your local bank or credit union.
1. Make It a Priority
What is a savings account? SoFi professionals say, “Savings accounts are a bank account designed to let you save.” You can improve your savings account by making it a priority. Saving should be a top priority in order to build wealth and financial security. A great way to start is by cutting out unnecessary expenses, like paying for premium cable channels you never watch or eating out too much.
In addition, put aside a portion of your income for savings. Whether it’s 5% or 20%, setting aside some money each month will make saving more manageable and less stressful on both the mind and body.
2. Only Spend What You Have
The second tip to improve your savings is to only spend what you have. It sounds like a no-brainer, but it can be easy to become excited about something and forget that you don’t have the funds available.
Credit cards are also a big no-no for this. It can be tempting to change things when you don’t have the cash because you think that you’ll be able to pay off your balance later on in the month when things get better financially.
3. Create a Spending Plan
A budget is a plan for your money. When you create a budget, you are deciding how much of your income will go to each of your expenses. Some people think budgets are restrictive and feel frustrated by having to give up luxuries, but they can actually increase happiness because they allow people to see where their money goes and keep track of it.
Creating a budget takes time—it may even require you to write down every single thing that comes into or out of your account—but once it’s done, making decisions about spending will be easier because there is less room for impulse buying. So you won’t spend more than what was planned, and any extra funds can be saved toward future goals like retirement or starting a business.
4. Track spending
If you have debt and want to improve your savings, tracking your spending is essential. It’s a great way to figure out what you’re spending money on and whether or not you’re saving enough.
To start tracking your spending, open up a spreadsheet or use an app like Mint.com. Make sure that all of the accounts where the money goes in and out are listed: checking accounts, savings accounts, credit cards, student loans—anything. Then write down how much money comes in every month as well as how much goes out every month using this formula:
Income – Living Expenses = Savings Amount
If you want to improve your savings account, you have to start with a plan. Keeping track of your spending and ensuring that all of it is accounted for will help keep you on track so that you can see how much money has been saved each month.