Creating an emergency fund, building a nest for retirement and setting aside money for your kids’ college fund are fundamental steps to ensuring long-term financial well-being. But how do you actually save money? It’s easy to say, “I’m going to save money,” but it’s a hollow promise, without a plan.
We are going to give you a plan. The secret to saving money, in fact, is to adopt several money-saving strategies and actually carry them out. Where easier, of course, but if you want to pad your savings, try these expert-backed strategies.
- 1 Here’s what to do if you want to save money:
- 1.1 Make a game out of saving
- 1.2 Modify your income tax withholding
- 1.3 Tweak your retirement accounts
- 1.4 Pay off high-interest debt
- 1.5 Identify areas where you can scale back
- 1.6 Pay your bills on time
- 1.7 Pay yourself first
- 1.8 Invest your raise
- 1.9 Use technology to save
- 1.10 Think about your financial future
- 1.11 Share this:
Here’s what to do if you want to save money:
- Make a game out of saving.
- Modify your income tax withholding.
- Pay off high-interest debt.
- Tweak your retirement accounts.
- Invest your raise.
- Use technology to save.
- Identify areas where you can scale back.
- Pay your bills on time.
- Pay yourself first.
- Think about your financial future
Make a game out of saving
Jacqueline Gilchrist, who manages the personal finance website, Mom Money Map, suggests using the “no spending” challenge.
“A no spending challenge occurs when you do not spend money for a certain period of time. It can be a weekend, a week or a month. You can set rules to spend only on essentials or other perks, ” she says.
By participating, “it forces you to be creative with what you have and learn new skills to avoid paying for solutions,” she says. “When you feel like you don’t have money to save, the challenge of doing nothing can possibly open your eyes to more ways to save.”
Modify your income tax withholding
If you get a big tax refund each year, Elio Alfonso, assistant professor of accounting at the University of Tampa, suggests that you consider adjusting your withholding allowance.
“Basically, you’re giving the IRS an interest-free loan during the year for no reason at all,” Alfonso says. “You must have more of that money in your bank account for it to earn interest and work for you.” If you choose to withhold less than your paycheck, just make sure you set aside some of that money to go into savings from each pay period.
Tweak your retirement accounts
It is not enough to invest money regularly for your retirement. You should also look at your retirement accounts at least once a year and see if you can improve the way you save for the future. For example, do you have an employer-sponsored retirement plan?
“How much are you contributing? Are you contributing enough to get the full employer match? Can you increase the amount you’re contributing?” Asks Mark Williams, CEO of Brokers International, an insurance marketing organization that provides resources and support for agencies and financial professionals.
“It may sound like a no-brainer, but you might be surprised how many people put off saving for retirement,” says Williams, noting that the longer you hold off on saving for retirement, the more Only you will remember the math magic of compound. interest.
Pay off high-interest debt
You can’t save money if you’re putting most of your money in interest.
“Pay off all high-interest debt like credit card debt immediately. High-interest fees are devastating to wealth accumulation,” says Barry Spencer, co-founder of Wealth with No Regrets, a financial planning firm in Alpharetta, Georgia.
So what about the house? That’s debt. But it’s low interest, and it appreciates in value over time, Spencer explains. So don’t worry about paying off the house early. And don’t make paying off debt your main goal. You still need to save, Spencer says.
“It’s a balancing act. If you don’t have enough money left over to meet your company’s 401(k) match, you’ll be paying off too much debt each month. But at the same time, you’ll need enough to pay off the debt.” The money needs to be allocated so that you don’t prolong the time you’re paying interest on the loan,” says Spencer.
Identify areas where you can scale back
“Take a look at your monthly expenses and see if there are any areas where you can reduce your spending,” says Joshua Zimelman, president of Westwood Tax & Consulting LLC in Long Island, New York. “For example, replace an expensive dinner with a homemade meal or cancel your cable in exchange for cheaper streaming services like Hulu or Netflix.”
Alternatively, you can negotiate your cable bill or switch insurance providers and choose a cheaper option. “You could probably cut a lot of expenses that would barely affect your daily life but could save you hundreds of dollars a year,” Zimelman says.
Pay your bills on time
“Don’t waste money on late fees and penalties. Avoid late fees and interest charges on your credit card, loan, and other bills by always paying in full and on time,” Zimelman says.
If you’re struggling to pay the bills, you may be used to a routine where you’re always late paying the bills—and seeing that you paid at all is a win-win. But just look at how much you are spending on late fees. For example, a late fee on a credit card can set you back as much as $40. If you pay off your credit cards late each month, in addition to paying higher interest rates than you otherwise would, you could potentially spend $480 a year on revolving debt — in late fees.
Pay yourself first
You hear this a lot. However, it’s still great advice.
“Saving money can be incredibly difficult when you’re struggling to meet your needs. The way to be successful is to determine a savings amount and consider it a bill, as opposed to any other, such as electricity or rent. It’s like a bill.” Elizabeth Windish, a certified financial planner at Aspen Wealth Management, which has locations in Colorado and Utah.
You have to consider whether what you put into savings is just as important as paying electricity or rent, she says, “because you’ll need the money to live later, or an emergency strikes.” ” She suggests putting away what you can, whether it’s $50 a month or $5. “Small amounts add up, and small amounts can be increased over time.”
Invest your raise
If you get a raise in the near future, put that extra money into a savings or retirement account.
Too often, “people move into a bigger apartment or buy a more expensive car to reward themselves. What happens is that they are unable to improve their financial situation because they spend everything they own,” Robert Johnson says Finance at Heider College of Business at Creighton University in Omaha, Nebraska.
According to Johnson, “People would be advised to heed Warren Buffett’s sage words: ‘Don’t save what’s left after you spend, spend what’s left instead.'”
Use technology to save
Johnson recommends downloading the right financial app to optimize savings.
“One popular app is called Acorns. You connect Acorns to your debit card, and it rounds purchases to the nearest dollar, effectively allowing you to invest your extra change,” Johnson says.
Here’s how it works: If you buy a latte that costs $4.44, when you use your debit card, $5 will be taken out of your account, with $4.44 going to the coffeehouse and $0.56 from your investment. will go to the account.
“It allows you to save money because you make everyday purchases and you don’t have to make the decision to invest the money,” he says.
Think about your financial future
If there is any secret to saving money, it may be one of the most important. From time to time, by all means treat yourself, but remember how spending more now will affect you later.
“One of the biggest behavioral biases is that humans tend to lean toward immediate gratification over late gratification,” Johnson says. “That is, our present selves tend to triumph over our future selves. For many people, imagining our future and giving up that vacation or new car today in exchange for having money to retire in the distant future Very difficult.”