In my new series, Love Your Money, I’m going to be sharing with you some of the ways you can take care of your money and show it some love.
Money loves to be paid attention to and these are the best ways you can accomplish that goal.
Our first lesson is on how you can start saving and how to do it the smart way – read on!
LOVE YOUR MONEY: SAVING SMART
In my opinion, one of the best ways to love your money is to save it.
Most of us spend more than we earn. The national personal savings rate has dipped to the lowest point since the Great Depression, and so we know American’s are saving less and less than ever before. We spend more money on food, housing, gasoline, energy and the like than ever before, and so the thought of putting together anything substantial to plop into the savings account seems rather daunting.
But if not now, when?
Saving money is crucial to your overall well-being.
It will help you be prepared for the good and bad times that we know lie ahead. Anything can happen to us in this lifetime. We can lose a job, retire, get sick, lose a loved one who was the sole provider. The list is endless.
Without a proper savings plan in place, life can get pretty messy.
The best way to love your money is to save it.
No matter what your age and how far off your retirement might be, saving needs to be part of your financial strategy. There’s no time like the present to make a difference on your tomorrow.
HERE ARE THE BEST WAYS TO SAVE SMART
1. Pay Yourself First
We’ve all heard this advice, but few take it to heart and implement it. Typically, the money comes in, and we write a check to everyone before we even think about ourselves.
It’s vital to your overall financial strategy to pay yourself first and put money into your savings account. It’s the only way to ensure your financial well-being. Nowadays most banks and financial institutions can automatically transfer funds from your checking account into your savings account, money market, mutual fund or other accounts. Using an automatic deposit system will create a habit that will be easier to maintain. I’ve been using Capital One for years for my automatic savings strategy. Each month a certain amount of money is deducted from my checking into my savings account without me having to do anything. I just set it up and it does so automatically.
The other system I use is DIGIT. DIGIT tracks my spending habits and deducts small amounts each day. It really adds up and it’s so unnoticeable I don’t miss the money at all.
Using a system whereby it makes it difficult for you to gain access to the money and use it immediately is my personal choice. I enjoy knowing there’s a buffer between me and my money. If I want to withdraw money, it takes several days, making it unlikely I go through the hassle.
2. Save Tax-Free If You Can
The one thing I miss most (probably the only thing I miss) about not working in corporate America, is an employer contributing 401(k) retirement plan. If you are lucky enough to have access to an employer plan, immediately max out the amount you can contribute. Set aside enough to be eligible for any matching funds that may be given by your employer.
The government likes saving so much it provides a federal tax credit to qualifying low-income savers.
For more information, read IRS Publication 590, Chapter 5, at www.irs.gov.
3. The Truth In Savings Act
The Truth in Savings Act requires financial institutions to disclose the following information on offerings:
- Fees on Deposit Accounts
- Other Terms and Conditions
- Interest Rates
- The Annual Percent Yield (APY)
Use this information when determining the best savings institution you’ll use.
4. Figure Out Where You’ll Save
Once you decide you’re going to start saving some money, you need to figure out where you’ll put your moolah. In the old days, people put their money under the mattress. That doesn’t work in this day in age. Not that you can’t have some money available in your home for an emergency, but for long-term saving you’ll need to choose a legitimate location.
Several common savings options include:
- Savings accounts
- Money market accounts
- Certificates of Deposit (CDs)
Some of the most important considerations in choosing a savings vehicle include:
- How quickly can you access your money?
- How safe is your money? Is it federally insured?
- How much money will you earn? What are the interest rates and terms?
- Are there minimum balances required? Are there limited checks that can be written per month or penalties for early withdrawals?
5. No Better Time To Start
Can only save $5 a month? That’s ok. Even small amounts add up over time. The faster you start saving, the more you’ll accumulate. The experts warn for every five years you delay, you’ll need to double your monthly savings goal to achieve the same income at retirement. Try setting aside $25 a week and if you don’t miss it, add another $25. If that’s too much pick another number, but use the same concept.
Saving money is critical to your overall financial stability.
There are so many different ways you can save. Using automatic savings strategy is always a great choice and don’t forget to maximize your 401 and 403(b) plans with your employer.
Remember to start saving today to ensure the safety and security of you and your family.