Getting stimulus checks from the government in the early days of the pandemic saved Americans quite a bit of money.
But things have changed.
According to the Federal Reserve Bank of St. Louis, Americans’ personal savings totaled $626 billion in the third quarter of 2022, a significant decrease from $4.85 trillion in the second quarter of 2020.
Savings are now even below pre-pandemic levels.
Here’s the blunt reality: Incandescent inflation continues use up savings. And it doesn’t help that economic growth has been sluggish while companies announce major layoffs. Living from paycheck to paycheck has become the norm.
Quite a few experts have called for a recession. So now is a good time to buck the trend and build up a healthy savings cushion.
Here are three ways to help you with that.
Do not miss
Savings refers to the money you have left after you subtract expenses from your disposable income. So, to increase your savings, you can either increase your income or decrease your expenses.
In this economic climate, it’s probably a good idea to stop buying expensive items that you don’t absolutely need. In fact, Amazon founder and CEO Jeff Bezos recommends just that.
“If you’re an individual considering buying a big-screen TV, maybe you should wait, keep your money and see what happens,” Bezos told CNN. “The same goes for a new car, a fridge or whatever.”
There are also ways to cut expenses that you can’t avoid.
For example, if you pay too much for your car insurance, you can compare car insurance and save up to $500 a year.
The same applies to household contents insurance.
As premiums go up, comparing multiple home insurance plans is an easy way to make significant savings.
Increase your income
Changing jobs may seem daunting.
However, data from Pew Research suggests that 60% of people who changed jobs or employers between 2021 and 2022 experienced an increase in income. Now less than half of people who stayed in their jobs saw wage increases.
So if you’re looking to build up some savings, leaving your current position or employer for better opportunities may be the best way to get the raise you’re hoping for.
Continue reading: Increase while the market goes down: Here are the best investing apps to jump on “once-in-a-lifetime” opportunities (even if you’re a beginner)
If you don’t want to change jobs, consider finding a part-time job — something you get paid for on top of your full-time job. It allows you to earn extra income – and could even be a way to test the entrepreneurial waters.
There is no need to start big.
A simple side job like tutoring could be worth $75 to $90 an hour, while dog walking could net you up to $1,000 a month.
insert small change
When it comes to building a financial safety net, you don’t need large sums of money. In fact, you can start with a few nickels and dimes.
A survey by MyBankTracker found that 55.5% of Americans don’t do anything with their loose change. They just let it sit. But these coins add up quickly and you can wager them.
When you shop with your credit or debit card, some apps automatically round the price up to the nearest dollar and put the excess — the coins that would end up in your pocket if you paid cash — into a smart investment portfolio.
Your small change doesn’t seem to be much. But take a look at this math: Daily round-ups of $2.50 add up to $900 a year — which can then make more money in the market.
If you’re hesitant to jump into the volatile stock market, using spare change could be a smart way to unwind.
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This article is informational only and should not be construed as advice. It is provided without any guarantee.