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11 Things You Must Do When You Are Saving Less Than $100 Each Month

Khanchit Khirisutchalual / Getty Images/iStockphoto
Khanchit Khirisutchalual / Getty Images/iStockphoto

Being able to save any amount of money, even if it’s a small sum like $100, is a great starting point to achieving your other financial goals. But if you’re unable to increase your monthly savings amount, you might find yourself losing motivation to make those goals happen.

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You might also be at greater risk of falling to financial emergencies when you don’t have much money set aside. Even if you are able to pay for a surprise expense, if it drains your bank account, that can lead to additional stress that you just don’t need.

If you find yourself saving $100 or less a month, here are some things you should do to improve your financial stability, cut down on stress, and increase your savings amount.

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Take Pride in the Little Things

First, it’s important to remember that not everyone is able to save money each month. So, even if you’re only saving a small sum, that’s still an accomplishment.

“When you are saving small amounts, the key is to focus on the fact that you are saving, not that it is small,” said Dr. Jay Zigmont, PhD, CFP, founder of Childfree Wealth. “If you are able to save something each month, you are making progress.”

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Automate Your Savings

If the money’s there, but consistency is the problem, set up automatic savings to ensure you’re putting aside a little every month.

“Set aside however much you can from your paycheck to be automatically deposited in your savings account. Even $10 a paycheck can add up over time,” said Abby Wendel, president of consumer banking business at UMB Bank. “Doing this can make it easy to save where the money is never missed, and you won’t be tempted to spend it seeing it in your checking account.”

Use a high-yield savings account rather than a traditional savings account so that you can benefit from more interest over time.

Set Up Savings Challenges

Gamifying your finances can make them more palatable and more fun, while helping you stay motivated to keep saving.

“Set a challenge to increase your savings amount each month, or quarterly, even if it is only a few dollars more,” said Zigmont. “By saving first, you will have less temptation to spend your savings. Out of sight, and out of mind, savings will grow over time while you are building good money habits.”

Evaluate Your Budget

If you’re struggling to save up much money every month, you may need to reassess your monthly budget. Review your spending habits and see if there are any areas where you can reduce expenses so that you can save more.

“Be very aware of [your] financial situation so that [you] understand the exact amount of money [you’re] pocketing every month,” said Sebastian Jania, the owner of Ontario Property Buyers. This can give you a better understanding of your finances and how they fluctuate over time.

If you do decide to cut back on spending in certain areas, do so with caution. The goal is to leave more wiggle room in your budget and save more. It’s not to reduce your quality of life or incur stress in other areas.

Increase Your Income

If you’re already working full-time, the idea of trying to find more time in the week to increase your earnings might seem daunting. But there are ways to do it without adding inordinate amounts of stress to your life.

“Taking on a couple of extra hours a week at [your] job or starting a side gig of some sort” can be a great way to start increasing your savings amount, said Jania. Or you can sell unnecessary household items that are just taking up space. Put any extra money into your savings account.

Set Clear Savings Goals

Having a clear intention for your money can make it much easier to commit to saving larger amounts more consistently over time.

“Create a new savings goal to work towards and keep your goal visible in your daily life to keep yourself motivated and accountable,” suggested Wendel.

Increase Your Savings Incrementally

You might find that you can increase how much you save organically over time. This can happen in several ways, such as if you get a raise or promotion at work, or you’ve eliminated a monthly debt payment. Whatever the case, if you have a little extra money each month, put that toward your savings goals.

Avoid Lifestyle Inflation

If you’ve experienced a significant income increase, try to avoid making any major lifestyle changes as this can hinder your ability to save.

“When you get pay increases at work, it may be tempting to ‘up’ your lifestyle. I think a great compromise is to split the pay increase partly into savings and partly into spending more in ways that bring you joy or just simply make your life easier,” said Carla Adams, founder and financial advisor at Ametrine Wealth.

“For example, if you get a 4% pay increase, take 2% of that increase to put towards savings and the other 2% towards spending more,” said Adams. “Certainly, with larger pay increases you’ll want to allocate a greater proportion to saving than to spending until you are saving at least 10% of your income each month.”

Leverage Your Money

Even if you only have $100, you could still leverage that amount of money in ways that make your savings grow. One way is to invest it in high-performing stocks.

“Saving is not the game you want to play,” said Hector Castaneda, CPA, principal at Castaneda CPA & Associates, PS. “Leveraging the dollars you do have to put into a limited liability company that can eventually borrow money and invest in other resources at a lower rate and pocket the difference will be more fruitful.”

Keep in mind that this strategy won’t work for everyone. You might also need to reevaluate your investing options if, say, you’re a young parent with children.

“There are tax-efficient solutions that can set up your child for success in 18 years, such as a 529 plan or Coverdell,” added Castaneda. “These plans are highly beneficial to those interested in paying for the child’s college as the savings in that trust will grow tax-free as long as they meet the stipulations.”

Build an Emergency Fund

If you don’t already have one, you should start putting your money toward building an emergency fund. That way, you’ll be covered if an unexpected bill comes up.

“Start building up your emergency fund savings so that if you experience unemployment at some point, or unexpected costs like medical bills or car repairs, then you don’t have to turn to high-interest credit cards which can lead to a debt-spiral that can be difficult to get out of,” said Adams.

Shoot to have between three and six months’ worth of living expenses set aside. Use a separate account so that you’re not tempted to use it on other bills or fun things.

Pay Off Debt

If you have debts, like credit cards, you might want to focus on paying those down before building toward other financial goals.

“You can rapidly increase your savings using the ‘snowball method’ where you allocate your savings each month toward the lowest debt balance you have,” said Adams. “Once that balance is paid off, you put the money (both the minimum payment and the savings) you were putting towards paying off that debt towards the next lowest debt balance and so forth.”

It can take months or even longer to pay off all of your debts. But you’ll start gaining momentum more quickly as you pay off each one. Once you’re debt-free, or at least have fewer monthly debt payments, you’ll also have more money to put toward savings.

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This article originally appeared on 11 Things You Must Do When You Are Saving Less Than $100 Each Month