You’ve heard it before. You’ll hear it again. You’ll never stop hearing it as long as you’re a part of the human civilization. The smartest thing you can do with your money is to save it. But how? You’ve got car payments, insurance and student loan payments, credit card debt, monthly cell phone fees; you need a promise ring for girlfriend and you’ve got to make a down payment on your mortgage; you have a health care premium to pay, groceries to buy, a dog to feed, a car to keep fueled. The list of regular expenses goes on and on. Then you have your unexpected emergencies that you need contingency money for. Car accidents, injuries, identity theft—there are any number of disasters that can come along and zap your bank account before you’ve been able to funnel away money toward a savings account. So what can you do? Buckle down, get out a notepad, and strategize. Here are five ways to save money for the future:
Budget. Living on a budget is not the most fun lifestyle in the world, but for most families it’s a necessity. Not only does it teach discipline, it makes you really think about what you’re spending your money on. Partition your expenses into brackets—groceries, bills, gas, etc.—and figure out how much your minimum charge will be. Then stick to that minimum. Living like this will make you think extra hard before buying expensive bottles of wine or forgetting to turn the heat off while out of town.
Eliminate credit card debt. While it may feel like you’re losing money in the short run, in the long run you’re saving thousands of dollars on APR that you would be giving to the bank in interest. Credit debt is a plague on our society and even the best of us can catch the death if we’re not careful. Excessive credit card debt is usually a sign you’re living beyond your means. Reign in your recreational expenditures and pay that debt off.
Pay into a 401(k). Alt card hough recent economic conditions have forced some employers into fleecing their 401(k) retirement plans, many companies still offer them for their employees. If your work is one of them, you should definitely pay into a 401(k). This will deduct pre-tax money from your paycheck and put into an account whose funds are often matched by the employer. If your employer doesn’t offer a 401(k), you can look into a tax advantaged IRA or Roth IRA, both of which leverage tax breaks on your savings.
Save monthly. Carve a reasonable percentage out of your salary every month and dump it into your savings account. Even if you’re only making a couple grand a month, siphoning off $500 will add up in time. If you did that every month for year you’d have saved six grand. Nestled in a high yield savings account, six grand can garner you an extra $600 bucks a year. Get started by having your account automatically deduct from checking to savings on a monthly basis.
Invest in stocks and mutual funds. But do your research and plan for the long term. Stocks are not a get-rich-quick scheme and often take years to accrue substantial gains. Pick stocks like you would pick a godfather—old, wise, dynamic, and monied. Mutual funds are safer, but often riddled with fees. Opt for fee-only advisors when possible.
The most sure-fire way to save money is to practice elements of all these strategies. Most of the money-saving methods listed here are exceedingly practical and can be utilized by almost anyone. A combination of judicious planning, discipline, and frugal budgeting can result in a financial nest egg that can put your kids through college and support you in your retirement.