blog

5 Ways Your Paycheck Can Boost Your Savings Account

Your monthly paycheck gets used for many essential items, so it’s easy to forget about saving. Here’s our guide to show you how to take a more structured approach to your monthly paycheck – one that will provide what you need today and in the future.

For many, payday never comes quickly enough. The monthly injection of cash pays for our essentials (rent, bills, groceries etc) and our lifestyles (restaurants, clothes, hobbies etc). It should also be used to pay down some debts and put a little into a savings account.

However, it can be hard to work out how much you should use for each different need. And if you don’t know what your short term needs are, it’s near impossible to plan for the future.

So here are 5 top tips to help you put your paycheck to better use whilst boosting your savings.

Make a plan

As with everything in life, you stand a better chance of success with a plan. And it’s no different when it comes to understanding what to do with your monthly paycheck.

In order to get the most bang for your monthly buck, look at what you’re spending and when. Tot up your essential expenses and then work out what you’ve got left over to pay for your lifestyle, debt and savings. Write it down in a list. Maybe even make a spreadsheet.

Once you have a good idea of the overall picture, you can focus on improving specific parts.

Pay down debt and credit cards each month

Now you know what your essential outgoings are, you can put the remainder of your paycheck to better use. And the best way to utilise the remainder is to prioritise paying down debt and credit cards. The sooner you do this, the sooner you’ll know what to put into a savings account.

The trick to paying down debt and credit cards is two-fold:

If you can, pay off balances, not just interest.
Going forward, leave credit cards at home and pay for items with cash, not debt.

Once you have your debt under control, you can begin to grow your savings.

Understand, in detail, your lifestyle spending patterns and habits

With so much of our financial lives now electronic (online, credit cards, payment platforms etc), we don’t really have a clear idea of what we spend each month. Many payments we make are made on a recurring basis, and some of these will have been forgotten.

You likely know your gym and phone costs. But the magazine you’ve been getting but not reading for two years, do you know what that costs per month? What about that subscription streaming service you used to watch one football match last year? Did you cancel it?

The trick here is to dig into the details of your monthly lifestyle expenditure. Do this by regularly going through a bank statement line by line. Like throwing away clothes you no longer wear, anything you no longer use, cancel. And bank the saved cash into your savings account.

Save and invest as much as you can every month… even if it’s only a little

Now you have the essentials in place… you can begin to save a little more money.

The trick with putting money into a savings account is to remember that there’s no amount too small. In fact, the amount you set aside is less important than getting into a regular habit. It can be as little as $10 a month, which you can put into a savings account or low-cost tracker fund.

You’d be amazed at the return even a small amount can generate over the long term. This is partly down to the magic of compound interest, which you can learn more about here.

Stay on track

Even the best-made plans need regular attention. So be sure to check every month on whether the plan you put in place is delivering the goods. Part of this checkup should be to see how much money is being allocated to your savings account.

Plan a time each month to review how your saving is going. With some preparation, you’ll keep your savings goals on track, ensuring that your paycheck is being used to the maximum.

Sarwa can help

Here at Sarwa, we know that getting the most from your monthly paycheck can make all the difference when securing your financial future. As part of that, we think that everybody should be making contributions from their paycheck into a savings account or an investment account.

When you receive your paycheck, you should pay for essentials and pay off some debt. Then you could allocate some money into an investment account at Sarwa. You could even think about making a systematic investment plan, where the money you transfer to Sarwa is invested for you each month. Or, whatever your age, it might be time to think about a retirement plan.

Over time, this structured approach to saving will build into a sizable investment pot. And this will help you to get the most from your monthly paycheck both today and in the future.

Ready to invest in your future?

Start now

admin