How to Build Your Savings Account

Look at ways to reduce expenses and increase income

Saving Money

JGI/Jamie Grill/Getty Images

Building savings is an important financial goal for many people. So often when we think about saving money, though, the first thing that comes to mind is cutting back on expenses. And while that is important, if that is all you focus on, you will miss half the opportunities to build your nest egg.

The key to building savings is twofold: reduce expenses and increase income.

Increase Income

Let's start with the income side of the equation, though pairing reduced expenses with increased income will grow your nest egg much faster. Try these methods for increasing your income:

  • Get a raise at your current job. While this is not necessarily easy, with just a little research, you can learn how to negotiate a salary increase.
  • Find a new job that pays more. Again, not easy, but starting a job search can also help you negotiate that raise if you like the job you have.
  • Get a second job, either inside or outside the home. You can make extra money moonlighting in a work-at-home job, and being at home makes holding a second job much more manageable.
  • Start a work-at-home business. How much time and effort you put into this can really vary, as does the pay.
  • Pick up extra cash doing microjobs. Squirrel away all the extra bit of money you earn at these tasks.

Reduce Expenses

Creating a budget and sticking to it is a first step in reducing expenses. But a budget is just numbers on paper. Actually reducing expenses is done in our everyday lives, and it's not easy, but here are some ideas for reducing expenses:

  • Review monthly expenses and see what can be eliminated or reduced. Don't be afraid to negotiate with companies you deal with. You'd be surprised at what you can save.
  • Shop around to find deals on everyday items. You may have to spend some time to save some money, but if you are serious about building a nest egg, it is worth it.
  • Working from home saves money on everything from childcare to clothes.
  • Reduce your debt or, better yet, avoid debt in the first place.

Build Your Savings

As you make the effort to reduce expenses and increase income, you must, of course, actually save the money these efforts yield. Build savings by having a certain amount automatically deposited into a savings or investment account. If you pay off a debt or are able to decrease your spending on an item already in your budget, have the money in the budget deposited into savings regularly.

And be careful not to break into that savings for just any old thing. Determine in advance what you are saving for ​so that you know when it's the right time to spend it.

If your strategy for building savings involves making extra money, try depositing your earnings from all or some of your work-at-home endeavors into a savings account. if this is new income for you, then you won't miss it, and you will see your nest egg grow.