Student Loans – How To Save Money: 5 Steps To Make The Process Painless Zoom Fintech
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Starting a new savings journey can seem daunting, which could make you put off until later. If you’ve found yourself in this situation, you’re not alone: In 2019, 59% of Americans between the ages of 18 and 29 didn’t have an emergency savings account, according to the AARP.
But saving doesn’t have to be complicated or difficult. Even saving a little bit at a time can add up.
If you’re ready to get started, here’s how to save money in just five easy steps:
- Make a budget
- Find ways to reduce your expenses
- Set goals and prioritize
- Open a backup account
- Automate the savings process
1. Make a budget
Before you start saving, you first need to know what you can afford to save. Here’s how to calculate that:
- See how much money you make each month. You can check your recent pay stubs to find this number. If your income varies, use the past few months to estimate an average amount.
- Subtract your expenses. This will include fixed expenses – such as your rent, student loan payments, and utility bills – as well as what you typically spend each month on groceries, dining, and entertainment. Take that number and subtract it from your monthly income. The result is what you can afford to put aside in savings.
Once you have these numbers, you can create a budget detailing your monthly income, expenses, and savings goal. If you don’t have a lot of money to put aside, your budget can also help you see where you could cut spending to save more down the road.
If you’re new to budgeting, there are plenty of online tools and apps available, such as Mint and Personal Capital, that can help you get started.
2. Find ways to reduce your expenses
After you create a budget, you can see if there are ways to reduce or even eliminate some of your expenses so that you can spend more money on saving. You don’t have to make drastic lifestyle changes – even small adjustments to your habits could save you a substantial amount of money.
Here are several options to consider:
- Cancel recurring subscriptions. If you have multiple streaming subscriptions (such as Netflix, Disney +, or Hulu), consider unsubscribing or keeping only one service. Canceling a streaming subscription could save you $ 18 or more per month.
- Refinance your student loans. If you have student loan debt, refinancing your student loans could lower your interest rate, which could help you save money on interest charges and potentially pay off your loans faster. . Or you can choose to extend your repayment term to lower your payments, freeing up more money each month, but keep in mind that if you choose a longer term, you will pay more interest over time. Also, keep in mind that while you can refinance both federal and private student loans, refinancing federal loans will cost you federal benefits and protections such as access to income-tested and loan repayment programs. forgiveness of student loans.
- Consolidate credit card debt. If you have credit card balances with a high Annual Percentage Rate (APR), you may be able to get a lower interest rate by consolidating it. For example, you can use a personal loan for debt consolidation or a balance transfer card. It could help you save money and even pay off your debt faster.
- Prepare your meals. Dining out or using delivery services can add up, costing you hundreds of dollars in additional food expenses. Instead, spend time planning and preparing meals ahead of time so you have tasty and nutritious foods in your fridge – and hopefully you’ll be less tempted to drive to the drive-thru.
- Get your money back. If you are going to work, check with your human resources department to see if your employer will reimburse you for travel expenses. Or if you work from home, see if you can get some of your internet, electricity, or phone bills reimbursed.
- Use only networked ATMs. If you use an off-network ATM to withdraw money, you could be hit with fees of up to $ 4.72 or more. Reduce unnecessary fees by using only networked ATMs or by reducing the frequency in which you completely withdraw money.
- Check the coupons. Whatever type of store you browse, be sure to see if there are any coupons available before you checkout. Also consider joining store loyalty clubs to gain access to more coupons.
- Rent additional space. If you have a spare bedroom or even an unused closet, you may be able to turn that space into extra cash. You can rent unused space on sites like Neighbor or StoreAtMyHouse.
- Refinance your mortgage. If you are a homeowner, you may be eligible for a lower interest rate on your mortgage through refinancing. Depending on the rate you get, you could save thousands of dollars refinancing your mortgage.
To verify: Using the Debt Avalanche Method to Pay Off Debt
3. Set goals and prioritize
When you start to learn how to save money, you may lose motivation more easily than you expected. To prevent this from happening, be sure to set concrete goals for your money and prioritize accordingly.
To help you track your progress, open separate savings accounts for each of your goals instead of keeping all of your money in one compartment. This way you can adjust your savings according to your goals.
Learn more: Debt Snowball Method
4. Open a savings account
There are several types of accounts available to help you save. However, the right type of account for you will depend on your goal.
For example, if you are saving for retirement, a 401 (k) account or an individual retirement account (IRA) might be a good choice. But if you want to put money aside for emergencies or short-term financial goals, you’ll need to use another type of account, like a high-yield savings account.
5. Automate the savings process
Having money automatically taken from your paycheck and placed in your savings account is a great way to get your savings off the ground. Plus, it can help you avoid accidentally spending the money you want to save.
Most banks will allow you to set up automatic deposits, which will withdraw a certain amount from your checking account and deposit it into your designated savings account.
You can choose to set them up every week, every month, or even a specific day of the month. Consider setting up a recurring deposit to withdraw money each payday before you can spend it.
To verify: Find your student loan
Starting small can pay off big
Remember, the most important part of saving money may just be getting started. You don’t need hundreds of dollars to start saving – even setting aside just $ 5 or $ 10 a month could pay off big in the long run.
To give you an idea of how the monthly savings can accumulate based on your contributions and the Annual Percentage Return (APY), check out the table below:
|Monthly contribution||Balance after 3 years||Balance after 5 years||Balance after 10 years||Balance after 20 years||Balance after 40 years|
|$ 5||$ 182||$ 305||$ 619||$ 1,275||$ 2,713|
|$ 10||$ 363||$ 609||$ 1,237||$ 2,550||$ 5,426|
|$ 15||$ 545||$ 914||$ 1,856||$ 3,826||$ 8,139|
|$ 20||$ 727||$ 1,218||$ 2,474||$ 5,101||$ 10,852|
|25 $||$ 908||$ 1,523||$ 3,093||$ 6,376||$ 13,565|
|*To note: Assumes a starting balance of $ 0 and an APY of 0.60% compounded monthly. Balances are rounded to the nearest whole dollar.|