How to Save More Money in 2021
As we enter a new year unsure of what 2021 has in store, it’s important that we reevaluate how we save money. We can certainly expect that President Joe Biden is planning on beefing up the federal response to the coronavirus pandemic. Whatever the case, the U.S. economy has a long way to go before total recovery. To young Americans who might be struggling to find a job or who rely on side gigs to pay the bills, being smart about money was never as important as it is now. Unfortunately, many of us lack a solid understanding of economics.
Savings, Ludwig von Mises wrote in Human Action, is what drives us forward toward “a more plentiful existence.”
“Without saving and capital accumulation,” he concluded, “there could not be any striving toward nonmaterial ends.”
So how do you start saving? And how can you expect to save in the midst of an economic crisis brought on by a global pandemic?
Below, I listed five important steps you should take to save enough money so you won’t have to worry, quite as much, about another pandemic-led economic crisis. Even if you’re struggling with underemployment.
1. Ditch All (But One) Streaming Services
According to some estimates, American households spend about $100 per month on subscription services like Netflix, HBO, Sling TV, Prime TV, and Hulu. But do people really need access to all of the entertainment that these services have to offer?
Even during the dog days of the pandemic, few of us really had the time to hop from one subscription service to the next to watch all shows, movies, and documentaries in their catalog. I know I didn’t!
If you’re willing to save in 2021, cut the streaming down completely, or if you don’t think you can go cold turkey, keep one provider that offers quality entertainment for a fraction of the cost. , And cancel all other options. You won’t miss them! But if you do, just remember that by the end of 2021, you will have potentially saved hundreds of dollars. You could put those savings to good use on projects that, I guarantee you, will be more fulfilling than wasting your life in front of the TV.
2. Switch to a High Yield Savings Account
It doesn’t matter what your financial status is at the moment, you probably have a checking and a savings account. But if you are like most young adults, you probably don’t even know what interest rate you’re getting on either of your bank accounts.
Switching to a high yield savings account means that you will be getting 20 to 25 times the national average interest rate of a standard savings account.
If, for instance, you put $5,000 in a high yield savings account, Investopedia explains, you could be earning over $100 over the course of a year, but if you deposit the same $5,000 in an average savings account, you would get a mere $5 bill within the same period.
Thanks to the fact that online banks have fewer expenses than brick-and-mortar ones, some are beginning to offer higher interest rates to new customers, like SoFi. That might just be what you needed to start building your savings.
Putting your money in a high yield savings account is a no brainer.
3. Stop Eating Out
In the era of covid, many young Americans found themselves locked away at home for most of 2020. As a result, some picked up some healthy food habits and learned to cook, prepare their meals ahead of time, and even bake their own bread. Others, however, relied on takeout, driving a demand for food delivery that the industry had never seen before.
Needless to say, those who chose to make their own food at home ended up saving. Big time.
According to CNBC, the average American saved up to $244 during the pandemic by simply not going out to eat.
While that might not sound like much, keeping your expenses to a minimum might help you save thousands over the course of a few years. If you ask me, that is definitely worth a shot.
4. Got Some Extra Time? Teach English Online
When it comes to side gigs that do not require any specific skill, teaching English online is one of the easiest (and probably most fulfilling) hustles out there.
Sites like Cambly, Palfish, iTalki, CafeTalk, and a series of other similar services allow anyone who’s a fluent English speaker to teach the language to foreigners online. While the rates may vary depending on the site, some of these services allow you to set your own rate.If you’re stuck home through most of 2021 and you have some time on your hands, this might just be the way to go!
5. Start Micro Investing
While there’s never a bad time to start investing, the practice can be quite daunting to someone with absolutely no background knowledge in finances. Furthermore, investing small balances isn’t as straightforward as one would expect.
With that in mind, millennials and zoomers who are hoping they will see their money grow in 2021 should keep an open mind about using apps designed precisely to help them micro invest.
One of the most popular micro-investing services out there is Acorns, which serves as an investing partner that rounds up purchases to the nearest dollar and invests the difference in a diversified exchange-traded fund portfolio.
Acorns also have cool features such as Found Money, which earns the user cashback whenever they spend money on partnering companies such as Macy’s.
Similar apps that might be of use when trying to start investing include Stash, Robinhood, and Wealthfront.
Whether you decide to follow all these steps or simply pick one or two to help you save more in 2021, remember to focus on what matters. That is, building enough savings so that you will never be caught off guard again.