When Americans were receiving 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.
According to data from the Federal Reserve Bank of St. Louis, the personal savings of Americans totaled $626 billion in Q3 of 2022, marking a substantial drop from the $4.85 trillion in Q2 of 2020.
Savings are now below even pre-pandemic levels.
Here’s the blunt reality: White-hot inflation continues to deplete savings. And it doesn’t help that economic growth has been sluggish while companies announce major layoffs. Living paycheck to paycheck has become the norm.
Quite a few experts have called for a recession. So now’s a good time to buck the trend and build up a healthy savings cushion.
Here are three ways to help you do it.
Savings refers to the money you have left over after you subtract expenses from your disposable income. So to boost your savings, you can either increase your income or lower your expenses.
In this economic climate, it’s probably a good idea to hold off on purchasing big-ticket items that you don’t necessarily need. In fact, that’s exactly what Amazon founder and executive chairman Jeff Bezos recommends.
“If you’re an individual considering purchasing a big-screen TV, you might want to wait, hold onto your money, and see what transpires,” Bezos tells CNN. “The same is true with a new automobile, refrigerator, or whatever else.”
There are also ways to lower expenses that you can’t avoid.
If you are paying too much for your car insurance policy, for example, you can compare car 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.
Boosting your income
Switching jobs may seem daunting.
But data from Pew Research suggests that 60% of people who switched jobs or employers between 2021 and 2022 saw their income increase. Meanwhile, less than half of people who stayed at their jobs saw any 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 at getting the salary increase you’re hoping for.
Read more: Trade up while the market is down: Here are the best investing apps to pounce on ‘once-in-a-generation’ opportunities (even if you’re a beginner)
If you don’t want to switch jobs, consider getting a side hustle — something you get paid for doing in addition to your full-time job. It allows you to earn extra income — and could even be a way of testing the entrepreneurial waters.
There’s no need to start big.
A simple side gig like tutoring could be worth $75-$90 an hour, while dog walking could net you as much as $1,000 a month.
Putting spare change to work
When it comes to building a financial safety net, you don’t need large sums of money. In fact, you can start with some nickels and dimes.
A survey from MyBankTracker found that 55.5% of Americans don’t do anything with their spare change. They just let it sit. But those coins quickly add up and you can put them to work.
When you make a purchase on your credit or debit card, some apps automatically round up the price to the nearest dollar and place the excess — the coins that would wind up in your pocket if you were paying cash — into a smart investment portfolio.
Your spare change may not seem like much. But take a look at this math: $2.50 worth of daily round-ups add up to $900 per year — which can then earn more money in the market.
If you’re hesitant about jumping into the volatile stock market, using spare change could be a smart way to ease yourself in.
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This article provides information only and should not be construed as advice. It is provided without warranty of any kind.