When Americans received stimulus checks from the government during the early days of the pandemic, they were able to save quite a bit of money.
But things have changed.
Americans’ personal savings totaled $626 billion in the third quarter of 2022, marking a substantial decline from $4.85 trillion in the second quarter of 2020, according to data from the Federal Reserve Bank of St. Louis.
Savings are now below even pre-pandemic levels.
Here’s the stark reality: searing inflation keep on run out of savings. And it doesn’t help that economic growth has been slow as companies announce major layoffs. Living paycheck to paycheck has become the norm.
Many pundits have called for a recession. So now is a good time to buck the trend and build a healthy savings cushion.
Here are three ways to help you do that.
Not to be missed
Savings refers to the money you have left over after subtracting expenses from your disposable income. So to increase your savings, you can increase your income or reduce your expenses.
In this economic climate, it’s probably a good idea to stop buying expensive items you don’t necessarily need. In fact, that’s exactly what Amazon founder and executive chairman Jeff Bezos recommends.
“If you’re an individual who’s thinking about buying a big-screen TV, you might want to wait, hold your money, and see what happens,” Bezos tells CNN. “The same goes for a new car, refrigerator, or whatever.”
There are also ways to cut expenses that you can’t avoid.
If you’re paying too much for your auto insurance policy, for example, you can compare auto insurance and save up to $500 a year.
The same goes for home insurance.
While premiums are on the rise, comparing multiple home insurance companies is an easy way to find substantial savings.
Increase your income
Changing jobs can seem daunting.
But data from Pew Research suggests that 60% of people who changed jobs or employers between 2021 and 2022 saw their income increase. Meanwhile, less than half of people who stayed in work saw wage growth.
So if you’re looking to build up some savings, leaving your current role or employer for better opportunities may be your best bet for getting the pay rise you’re hoping for.
Read more: Trade while the market is down: Here are the best investment apps to seize “once-in-a-lifetime” opportunities (even if you’re a beginner)
If you don’t want to change jobs, consider getting a side hustle, something you get paid for in addition to your full-time job. It allows you to earn extra income and could also be a way to test the entrepreneurial waters.
No need to start big.
A simple side job like tutoring could be worth $75-$90 an hour, while dog walking could net you as much as $1,000 a month.
Put the loose change to work
When it comes to building a financial safety net, you don’t need large sums of cash. In fact, you can start with a few dimes and dimes.
A MyBankTracker survey found that 55.5% of Americans do nothing with their loose change. They just let it rest. But those coins add up quickly and you can put them to work.
When you make a purchase with your credit or debit card, some apps automatically round the price to the nearest dollar and put the excess — the coins that would end up in your pocket if you paid with cash — into a smart investment portfolio.
Your reserve change may not seem like much. But check out this math: $2.50 of daily rounding adds up to $900 a year, which can then make more money in the market.
If you’re reluctant to jump into the volatile stock market, using loose change might be a smart way to relax.
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This article provides information only and should not be construed as advice. Comes without warranty of any kind.