Saving is the first step to building wealth and obtaining true financial freedom. But how do you start saving when you have very little money to set aside? Here are four ways to build your savings, and keep your money growing.

Keep it out of sight

One of the key mistakes would-be savers make is waiting for “spare money” to appear in their budget that they can save. For most, that day never comes, and building a savings remains an unchecked task on the list of financial “to dos.” Start by paying yourself first and putting a portion of your paycheck (even if it’s small) directly into a savings account before it ever “hits” your checking account. If you establish a savings account with your current bank, many offer automatic savings plans (ASPs) free of charge. If you establish a savings account at a different bank or online, you can arrange for your employer to direct a portion of your paycheck into a savings account through split direct deposit. If you’re issued an ATM card for the savings account, store it away so you won’t be tempted to withdraw the funds—unless an emergency strikes.

Get paid for saving

Deposit interest rates are at all-time lows, but online savings accounts have become simple to open and manage. Because there is no brick and mortar location, the banks’ operating expenses are usually lower, and in turn, they’re willing to reward customers who use them with higher interest rates, no minimum balance requirements, and no fees. For accounts that pay at least 0.80% interest (as of December 28, 2011) and require no minimum balance, check out online savings accounts at Ally, ING Direct, and HSBC Advance. If you’ve got at least $500 to save, Discover’s online savings account will pay you a full 1.00% annual percentage yield for saving. That would put $175 in your pocket over the next five years, just for contributing $100 a month to the savings account until then.

Identify a goal

Define your purpose for saving, whether it’s buying a house, planning for baby, or simply earning the financial independence to live the life you want. Pick a target number you want to reach to achieve that goal, and a date when you wish to reach it. Setting your goal in stone will keep your “eye on the prize” when other temptations to spend, and not save, arise.

Contribute as often as you can

Saving regularly is key to building your savings balance, but finding small opportunities to save will also help you to gain momentum and keep savings climbing. Got some holiday gift cash burning a hole in your pocket? Skip the new outfit and put it into savings instead. Look for little areas in your life that you could cut back on every now and then, like trips to the drycleaner, dinners out and mileage expenses that you can cut by biking or carpooling. Take the proceeds of your eliminated expenses, and plunk them right into savings. When it comes to savings, it’s the little financial changes you make, that add up in the long run.

Ally Bank
ING Direct
HSBC Advance
Discover Online Saving Account