Financial freedom isn't always about possessing great riches. For some, it can be as simple as getting a bit more breathing room from financial constraints like rent, car payments and other living expenses. That's a goal most people can work toward by making concerted effort to regularly set aside a portion of their income.
Although it might feel like well worn advice, saving is at the core of financial independence and can help you through the loss of a job or a sudden financial hardship.
Here are five steps to help boost your savings:
1. MAKE IT AUTOMATIC
For many, the biggest hurdle is getting into the habit of setting part of every paycheck aside.
"If you wait until the end of the month and try to save what's left over, all too often, nothing is left over," said Greg McBride, senior financial analyst at Bankrate.com.
So don't leave it up to discretion. Instead, arrange for a portion of your paycheck — some financial experts recommend as much as 10 percent — to be automatically deposited into a savings account.
2. TACKLE CREDIT DEBT
Carrying credit card balances for months or years on end will just keep you financially shackled and make it tougher to save. "We consider paying down debt a saving strategy," said Katie Bryan, of the Consumer Federation of America.
You'll pay down your credit cards faster if you don't hold back any extra income as savings, but Bryan suggests paying off your cards and building up savings at the same time.
Begin by making minimum payments on your cards until you cobble together $500 or $1,000 for unforeseen expenses, such as a car repair. Afterward, focus on paying down the card with the highest interest first.
3. CONSIDER ONLINE BANKS
Savings accounts at big banks, such as Bank of America or Wells Fargo, generally don't offer enough of a yield to meaningfully grow your balance. But you'll likely find offers of more attractive yields at online banks like Ally Bank and EverBank.
These Internet banks have few or no branches, so they don't have the expenses of brick-and-mortar lenders. But some require minimum balances, especially for their high-yield accounts. And you'll have to be okay with only being able to access your cash via ATMs or by setting up wire transfers.
EverBank was offering an annual percentage yield of 1.01 percent on its money market account recently, according to Bankrate.com. That was the highest APY being offered, though the account requires a minimum deposit of $1,500. Synchrony Bank's savings account offered a 0.95 APY, with no minimum to open but a monthly $5 fee.
For a no-minimum, no-monthly-fee savings account, GE Capital Bank was offering a 0.90 APY. By comparison, basic savings accounts at Bank of America and Wells Fargo advertised an APY of 0.01.
Online calculators can help estimate how much your balance will grow; see tinyurl.com/38jlcsm.
4. START LADDERING CDS
The knock against certificates of deposit is that over the long term, they rarely keep up with inflation because they're risk free. Still, CDs can be another way to grow your savings with minimal risk.
One approach, known as laddering, spreads money across several CDs that mature, or pay off, at different times. If interest rates rise, you will be able to jump to that higher rate when the next CD matures.
For guidance, try this online CD ladder calculator: tinyurl.com/y8zqnyt.
5. FEED YOUR 401(k)
The fastest way to save is when someone, like your employer, offers to match a portion of what you set aside.
If your employer offers a 401(k) retirement plan with such a perk, you're leaving money on the table if you don't put in at least the minimum amount to get the full matching funds.