Follow this formula, and you will always have enough money.
What’s the secret to saving money – and actually keeping most of it? We asked financial advisors and academics and culled some of their best tips.
Save early. The best savers start as early as possible, one of the experts say “They began to save a portion of their paycheck when they started their first part-time and full-time job. This gives their savings plenty of time to grow and take advantage of the miracle of compounded interest.”
Automate. Virtually every financial expert will tell you to make saving as easy as possible – and the best way to do that is to have a system where money automatically goes to a savings account.
“Set up an automatic debit from your paycheck to a savings or investment account, and pretend it does not even exist. You can even have it invested automatically,” says the experts. “It’s important to force yourself to live under your means if you are really trying to save up.”
Don’t spend your raise. Experts suggests that the next time you get a raise, automate or budget so that half of it goes into your retirement fund – the rest, you can keep.
When you pay debts off, don’t reduce your budget. After you pay off that massive credit card bill or those loans, it’s natural to want to use the extra money for clothes, entertainment and whatever else you can think of, but that’s exactly what you shouldn’t be doing.
“Rather than spending that money you were paying towards a certain debt, either take that same amount and pay it against the highest-interest debt you have on something else, or take that money and increase your savings and/or investment accounts,” Expert says.
Diversify as much as possible. It’s always smarter to save in several ways than just one. If you really want to save, you’ll want to put your money into not just a savings account but a retirement savings plan or a money market deposit account, or maybe you’ll want to invest in the stock market.
“The old adage about the eggs and one basket is true,”. “Should something happen to that one method of saving, you’d be left with nothing. The same can be said for what you invest in. Many folks found in 2009 that their home was no longer an investment [they could] bet on for wealth or stability. Making sure you’re taking advantage of several ways to save will mean less stress about your preparation for the future.”