We all want to improve our lives in some way, whether it’s by running a marathon, learning a new skill, or getting a promotion. But what about saving more money? That’s something that many of us neglect or find too hard to do.

But saving more money doesn’t have to be difficult. In fact, you can start by increasing your savings by just 1% each year. That may not sound like much, but it can make a huge difference in the long run, thanks to the power of compound interest.

Compound interest is the interest that you earn on both the money you save and the interest that money earns over time. For example, if you put $10,000 in an investment that earns 2% interest a year, after 20 years you would have $14,859.27. That’s a profit of nearly $5,000 in interest alone.

Now imagine if you increase the amount you save by 1% each year. For instance, if you make $100,000 and start by saving 10% of your salary, then increase it by 1% each year until you reach 15%. Assuming a 5% return, you would have $175,161 after 10 years, compared to $132,063 if you stayed at 10%. That’s a difference of nearly $45,000

So how can you save more money every year? Here are some tips:

• Know how much you saved last year. Look at your bank statements, retirement accounts, and other savings vehicles and calculate how much you put away. Then add 1% to that amount and set it as your new goal.
• Review your spending habits and cut unnecessary expenses. You can use a budgeting app, a spreadsheet, or a simple notebook to track where your money goes. Then identify areas where you can save, such as eating out less, cancelling unused subscriptions, or shopping smarter.
• Increase your income and save the extra money. You can ask for a raise, take on a side hustle, or sell some of your stuff. Whatever you do, don’t spend the extra money. Instead, put it in your savings account or invest it.
• Automate your savings. Set up a direct deposit or a recurring transfer from your checking account to your savings account. This way, you won’t be tempted to spend the money or forget to save it.
• Choose the right savings and investment vehicles. There are many options, such as 401 (k)s, IRAs, HSAs, and 529 plan. Each one has different tax benefits, rules, and purposes. You should diversify your savings and invest in different buckets, such as emergency funds, short-term goals, and long-term goals. You should also consult a financial advisor if you need help.

Saving more money every year is not impossible. With a little planning, discipline, and creativity, you can increase your savings by 1% each year and enjoy the benefits of compound interest.

Start today and see how much you can save in the future!