Secrets of Successful Savers
Why save? It may be to realize the plans we have for our lives — to own a home or pay for our child's education in the future. Or maybe it's to gain greater control of the unplanned things of today, such as emergency medical expenses or car or home repairs.
Finding a good reason to save is easy. What's not as easy is actually doing the saving. But successful savers know that saving money isn't all that difficult; at least when they follow these common saving secrets:
- Start early. The younger you start, the easier it is to become a successful saver. So even if you're just starting your career, it's never too early to start saving for retirement. With the power of compounding interest, saving early for retirement could result in having millions of dollars more in retirement.
- Save even a little. Even if you have a tight budget, you can still get in the habit of saving. Take any extra change you have and put it in a large jar, where it's difficult to get at the funds. You'll be surprised by how quickly the money will add up if you keep adding to it.
- Automate your savings. With today's convenient banking services, such as online and mobile banking and direct deposit, it's easier than ever to save money. You can arrange to set up automatic transfers from your checking account to your savings account each month. Or arrange to have a portion of your paycheck automatically deposited to your savings or retirement account.
- Pay yourself first. Saving money should always be a priority. So each pay period, pay yourself first by putting aside funds to save. And if you're fortunate enough to get a raise at work, instead of increasing your lifestyle or buying something you don't need, put the extra money in your savings account and live as though you never got the raise.
- Develop a budget — and stick to it. Successful savers know how much money they have to save. To determine this, track your income and monthly expenses. If you have money left over, save it.
- Avoid unnecessary debt. One of the biggest barriers for savers is debt accumulation. Try to minimize debt, particularly high-interest credit card debt. Remember a simple rule: if you can't afford to pay for something in cash, don't buy it.
- Determine "wants" versus "needs." We all like to have new things. But while you may want a shiny new car with all the bells and whistles, you may find your old reliable car can still get you where you need to be. When making a purchase, particularly a major purchase, think about if you really need it.
- Pay attention to fees. Are you paying too much for your gym membership or for your checking account? Take the time to understand the fees and find out how you can reduce or waive them.
- Also, be sure to pay your bills on time so you don't incur costly late fees.
The most important thing successful savers know is that saving money won't just help you realize your future plans; it also will help you sleep a whole lot better.