These 3 ways to help save money can make it easier to think about saving up for the future.
- Save for retirement
- Have an emergency fund
- Pay off debt
With tax returns just due and payments made, it can be difficult to think about saving up for the future, but these 3 ways to help save money can make a big difference. Reeling from tax payments and COVID-19 expenses, the lack of funds due to situations in the world can make you feel like you don’t have enough money for the future or for the now.
One of the 3 ways to help you save money is to think about saving for retirement as both a long-term strategy and a plan to keep you safe. In case you have a 401(k) plan at work, you can stash extra money in it, which reduces your income for the year and helps you save more money for retirement. If you don’t have a plan at work, you can start a Self-Directed IRA to save for the future. Remember that your retirement will, hopefully, last a long time, and you want to be able to enjoy it to the fullest.
What that “perfect” retirement looks like to you is a very personal decision. Some like to think about retiring in a mobile home and driving around visiting relatives in different places. Some think retirement should be a time to invest in their passion project, whether it’s a vineyard or an apiary. Spending some time planning the future can help you save by giving you a goal to work towards.
If you can save money for an emergency fund, it does more than just give you a financial cushion against adversity. It also provides a psychological break from worrying constantly about money. Studies have shown that financial woes can be the biggest stressor on everyone from single to married couples, all over the adult spectrum. There is an enormous advantage to having a fully funded emergency fund for things that are true emergencies – job loss or emergency surgery. These funds would be separate and apart from funding used for big purchases like a boat or a house.
Many experts recommend between three and six months worth of salary saved in an emergency fund, but everything starts somewhere, and every little bit helps. Saving for an emergency also helps you build good saving habits, which can get you on the road to financial freedom and success.
Paying Down Your Debts
It may seem counterintuitive to talk about paying things off when you’re also talking about 3 ways to save money, but it really depends on what the current state of your finances are. If you have an emergency fund already set up, you may already be in a better position than you thought.
While you continue to contribute, you can take money and pay off credit cards and their high interest rates. Getting credit card debt also opens up another emergency source of credit for you, in the event it is needed. But paying it down provides solid mental benefits as well.
Another way to save could be to get rid of one or more car payments. If you’re leasing, you could look to buy outright. If you’re paying for a car you don’t use, consider getting rid of it, or see if you can use it for Uber or Lyft.
Refinancing your home may help as well, by saving money every month in terms of what you pay. This can be a great option if what you’re looking to save for retirement can be directly banked by you, and you can still keep your home and make improvements.
There are many more than 3 ways to help save money but these are just a few ideas to get you started on your journey to financial freedom, or reclaiming your retirement savings.