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Where to Save Your Money?

The next question many people have is where to save their money or where to put the money that they have earmarked for saving.

• High-Interest Debts

If you have a high-interest debt then it’s important to pay this off before you do anything else. If you have unpaid balances on multiple credit cards, you should begin by paying off the card with the highest interest rate.
Pay as much as you can toward that debt each month until your balance is zero, while continuing to pay the minimum on your other cards. The same advice applies to any other high-interest debt (around 8% or higher) that does not provide any tax benefits.

Based on a survey by CreditCards.com, the national average credit card rate stood at 17.57%. Americans who held bad credit cards were charged the highest interest rate of 24.99%, while the credit card for low interest enjoyed lower rates at 14.61%.

You’re going to be spending a whole lot more in interest than you will earn on your savings so make sure that you put this ahead of anything else you’re doing.

• Retirement Savings

Next up, you need to make sure that you’re putting some money away for your own retirement. You should save around 15% of your income, but whatever you can put away is going to be better than nothing, so put at least as much as your employer will match (and max out that match).

Remember that your goal is to get up to 20% of total savings, but that doesn’t mean all of that needs to be in the form of retirement. The rest should go to other types of savings accounts so you have some money left over if you need it.

Make sure you’re signing up for automatic contributions if your company offers them. That means you don’t have to worry about depositing the money. It gets taken out of your paycheck before you even see it. That gets you used to not having the money.

For those who don’t have retirement options at their place of work make sure you create one somewhere else and still try to set up automatic payments and transfers so you don’t have to do it manually.

• Emergency Savings

You should only use your emergency fund for true emergencies, such as keeping yourself afloat between jobs, car repairs, medical expenses, or home repairs. You cannot use your emergency fund to go on a vacation, go on a shopping spree, or upgrade your perfectly good cell phone or laptop.

Having a substantial emergency fund provides you with peace of mind. Nobody wants to be one paycheck away from being unable to pay their rent or one car breakdown away from being unable to get to work.

These are crucial because in the event of an emergency you might otherwise find yourself using your credit card or borrowing against your house or retirement savings. Those are going to hurt you financially in a number of ways, so create a bit of a savings buffer in case you need it later on.

• College Savings

If you have children or if you’re planning to go to college you should start saving for this right away. The more you can save the better it’s going to be for the entire family. But keep in mind that saving for your own retirement is going to be even more important. You can’t borrow money for retirement, but you can for college.

Also, encourage your child to start saving for their own college education as soon as possible. Even a little bit at a time is going to make a big difference later on down the road.

Based on data from Ascensus, there is a gradual increase in the 529 Savings Account Average Balance based on age. The chart shows that people in age 25 to 34 years have the lowest average balance at $8,302, but this increases to $20,479 in ages 35 to 44 years, then to the highest average balance of $38,490 in ages 45 to 54 years.

• Special Purchases

If you really want to buy something special you should also have an account prepared for this. Make sure that you’re doing everything you can to put money toward your retirement and your savings first and then start looking at other goals that you might have and how you’re going to pay for those as well.

Prioritize the goals you have and then create a fund that will help you get there.

How Can I Save More Money?

If you’re struggling with just how you can actually save the best thing to do is take a look at some of these options and see if they can help you. You might be surprised at just what you can do with your money if you’re doing it right.

1. Put a Purpose to It

The first thing is to put a purpose to your savings. Just saving, in general, doesn’t excite most people and you find yourself struggling to keep up the motivation.

You make daily decisions that have an impact on your long-term goal. When you have a specific long-term goal in mind, you suddenly have context and can make better decisions. Better decision-making in that small decision moment over time guides you toward achieving a larger goal — specifically, what you're saving for.

When you set a savings goal, the goal itself motivates you to continue managing your money wisely, whether by saving more money or earning more money. You'll be surprised at how much of a difference the right motivation can make in your efforts to achieve financial independence.

This powerful motivator for increased savings and income can alleviate the reluctance that is often associated with changing your lifestyle in order to cut unnecessary expenses and avoid financial burnout.

If you have a goal and a plan in place it can change your mind about saving however and you might be more interested in the process. Just make sure you’re trying to put away money for your retirement and then that you’re putting it away for something fun and exciting. You’ll be more willing to make sacrifices this way.