8 Saving Strategies for Retirement & Emergency Funds
Whether you are 20 or 50, saving money is a choice that you can make to improve your future. That choice doesn’t go away, but how you handle that choice may change how much you have when you retire, or when an emergency happens.
Two areas that American’s struggle with saving for are retirement and emergencies.
This may be due to high student-debt, increased mortgage and rental prices, or for younger generations, it may just be a lack of financial education. Whatever the case, it’s important to plan for the future so that you are not buried in financial stress.
Here are 8 saving strategies that you can try:
The first step to saving money is understanding how much you spend! A budget should not be based on what you would like to spend every month, but rather on how much income you get in a month as well as how much you are spending. By building out a budget, you often see things that you didn’t realize, such as how much money those lattes really cost you a month. There are great budgeting tools out there for just about every style. You can find printable budgeting templates, spreadsheets, websites, and phone apps. You can find free, as well as paid services.
2. Save automatically OR before spending
This is a twofold suggestion but both help you save monthly amounts. Once you build a budget and understand how much income you can save every month, it’s important to not spend it! First you could set up automatic transfers to your saving or retirement accounts. Or you could manually move the money you would like to save for that month into a savings account which makes it harder for you to spend it. This second strategy works well if you have inconsistent monthly income OR expenses, which make it harder to know how much you have to save on a reoccurring basis.
3. Pay off debt
This one is obvious. You need to pay off debt. When you create your budget and see how much money you have to save a month, you may want to evaluate how much debt you also need to pay off. Without debt, you may save, say, 10% of your income. With debt, you may want to pay 5% of your income to debt and save the other 5%. The numbers will be unique to you, but putting some money to debt and a little to savings may make an impact. If you are overwhelmed by your debt, organize your bills by smallest to largest and work towards paying off that smallest one first. Getting one bill paid-off will help empower you to take on your bigger debt.
4. This isn’t a “Go Big or Go Home” situation
Don’t be discouraged if you feel like you can’t save a lot. Saving some is better than saving none! Don’t compare your situation to others as well. When it comes to saving, you need to focus on your personal financial goals and put blinders on to the success or failure of others. Your success is not measured by others.
5. Determine your “needs” versus your “wants”
If you are serious about saving money, then evaluating what you need and what you want will be important. You need to pay rent, but do you need that magazine subscription? Be judicious about this list. If a “want” item makes you extremely happy or helps with your health (such as a gym membership), then you may want to keep it. If you feel you can give up a “want” item, then that may help you save even more.
6. Make small changes in your day-to-day
Use lightbulbs that last longer and don’t use as much energy. Use coupons. Buy in bulk. Shop around for auto and home insurance every year. Entertain at home. Find cheap or free date night ideas. Rent a movie instead of going to the theater. Avoid impulse buys. This list could go on and on, but you get the gist of it. Figure out small ways you can save every day to help add to your overall savings.
7. Make a plan (and stick to it)
Develop goals and then determine what your strategy will be to reach them. Then you need to stick to the plan! If the plan doesn’t seem to be working, readjust and keep going. Find an accountability partner to keep you on track. It will take time, but by having a goal in place, you will be more motivated to keep up with your plan.
8. Work with a professional
Whether you need help dealing with your debt, improving your investments, or saving for retirement, there is no shame in seeking professional help. A professional financial advisor or planner may help you find value and savings that you didn’t know existed. They may also help you build your goals and develop a plan while keeping you accountable to it.
Saving is a choice, so whether or not you use any of these strategies is up to you.