Millions of people around the world are familiar with that feeling of wanting to save but never getting around to it. There’s never a wrong time to start saving, whether you’re just starting on your first ever job, or you’re newly retired, there are endless ways to save money and become financially independent. Here are some powerful and strategic goals that can set you up for financial success for the rest of your life.
Set Definite Savings Target
A good place to start saving is to decide exactly how much money you want to save for a specific purpose, e.g. buying a house, retirement, rainy-day-funds, etc. It might not be very easy to come up with an amount that will solve all your future problems, so you can start by setting short term, medium term then long term goals for saving.
When you have decided on a savings target, the next thing to do will be to write down the future project and how much you’re going to save for it. This way your savings plan ceases to be a mere wish but comes to life.
If your next big plan is to buy your first home, you could go take a look at the price of houses in your neighborhood of choice. Find out exactly how much you’ll need for a down payment, decide on the date you’ll love to move into your new home, and write them all down.
This advice applies not just to young people starting in the workforce but to everyone, including people nearing retirement age. Many times, older people take out a reverse mortgage to raise money for their retirement plans; however others, after considering the different reverse mortgage pros and cons, may decide to gradually save up the money instead.
Saving a specific savings target works for every kind of future project but this is just the first step to jump-starting your savings.
Start Funding an Individual Retirement Account (IRA)
Many employed people may already have a workplace retirement plan set up by their employee or a 401 (k) but this shouldn’t be a reason to not diversify your investment portfolio. Investing in an IRA is a great way of reducing your taxable income.
Whenever you change employers, never leave your retirement plan with your former employer. Check for your accumulated retirement savings and confirm whether you can roll them over into your individual Retirement Account. This makes it a lot easier to keep a check on retirement savings. Retirement savings can go a long way to keep one comfortable after retirement but the U.S Census Bureau confirms that about two-thirds of Americans are missing out on their 401 (k), and other available retirement plans.
When choosing an IRA, ensure you opt for a plan with the lowest fees. You may also seek the advice of professional third-party advice to find the option that is best for you and make the best rollover decision available.
Always Put Away Your Savings First
Whenever you earn income, always take care of your savings first. A lot of people want to spend their monthly income and then save whatever’s left at the end of the month. However, it never quite works that way. Most of the time, all the money is gone before the next payday due to so many issues to take care of, e.g. reoccurring bills, socializing, etc.
The sure way to have something left at the end of the day is to put away your savings as soon as your income hits your bank account. Subsequently, you can create a monthly budget around the money you have left and stretch that money so that it’s sufficient until the next paycheck. These days there are automated saving apps that help you take away your savings the moment they hit your account and store them in a specified savings account.
Taking your savings away from the start ensures that you do not make any unplanned and unnecessary expenses. Sometimes this may mean you have to tighten the belt a little, crunch the numbers and make some difficult decisions. These decisions include staying in on some Friday nights, eating out less, cutting out cable, renting a cheaper place, taking in some roommates, changing your internet service provider and cell carrier to cheaper options, etc.
This strategy may seem a lot difficult at the start but once you start seeing the money accumulate, you’d be eager to save something every month.
Build a Rainy Day Fund
At any age, starting to put away money for emergencies is never a bad idea. This is different from your retirement savings as your retirement doesn’t count as an emergency. Having a rainy day fund helps you preserve your retirement savings.
There are a lot of unexpected expenses that pop up in daily life. Many adults are unable to settle $500 emergencies without having to resort to undesirable measures such as borrowing. Having an emergency fund saves one this trouble and prevents one from accruing unplanned debt.
It’s important to acknowledge that debt is one of the toughest hindrances to jump-starting your savings. You can’t feel good putting your money away in a savings account when you’ve got a debt to service. Every month, put some money away in your retirement savings account and also put a certain percentage of your monthly income in your emergency cash reserves. You should have at least 10 to 15% of your income going towards savings.
Hire a Professional for Investment Advice
Sometimes saving money goes beyond just putting money away steadily. The money saved might never be enough unless it’s put to work. Putting your money to work sometimes involves taking brave steps like investing in the stock market or other similar investments.
Not everyone has enough knowledge to make these kinds of investments, this is the reason it is important to sometimes seek third-party advice from an expert to know how to grow your savings. There’s more of a chance for someone who received professional advice to make successful investments, compared to people who jump in blind.
The main trick when making investments is to keep it simple. Stick to what you understand and avoid falling for empty trends. Making the right investments ensures that your financial future is taken care of, no matter what happens.