5 Effective Ways to Boost your Current Savings
There are two types of people in the world — those who can save money and those who can’t. As a young professional, with the exception of major life events, the perfect time to save money is now! With simple ways to boost your savings, you can be amongst those who can rake up sizable savings early in your career, setting you up for financial stability further down the road.
Regardless of whether you want to get out of debt or maximize your investments, the following tips will help you realize your financial goals as a young professional.
- Reassess Recurring Monthly Expenses
Dissect your budget and assess your recurring monthly expenses. Most people don’t bother looking into recurring expenses as an option to boost their savings. Chances that you can get a better and cost-efficient deal. Two recurring monthly expenses include cable TV and phone bills. Check if you can get a better plan that can save you money. Watch TV shows online and cancel the TV subscription if that’s more economical. Check your insurance rates as well. Rates change all the time and if you don’t keep a regular check, you could be spending more than you need to. Look at renters insurance to see if you can get a net gain on your car insurance.
- Increase Your Savings Rate
You can increase your savings rate in a number of ways. If you are not contributing the maximum amount to your company-sponsored retirement plan like 401(k), then you can just increase your percentage contribution to the plan. If you are maxing out your company-sponsored retirement plan, you can probably contribute to an Self-Directed IRA or Roth IRA.
In case you are already filling your retirement bracket to the max, make regular contributions to a taxable savings account. It can be an investment account or you could stack up some cash in your emergency fund. Increasing your savings gradually will not only boost your net worth but also improve the overall financial health.
- Use Coupons and Sales
You really cannot make adjustments to large expenses like rent, mortgage or tuition fee, but there is one major expense that you can control smartly — food.
It is possible to save almost 25% off your grocery bill just by planning the shopping list around different sales on the store. If you shop for food online, check for cash back options or use coupons. Lastly, buy only what you know you will eat. Don’t throw away the food as you would be wasting the coupon savings along with it.
- Do Financial Checkups
Just like you would go for regular health checkups, it is essential you do regular financial checkups as well. Keeping track of your spending against the income will help you determine if you are living within your means or not. Keep monitoring your bank account on a daily basis and don’t forget to check the retirement account balances. Hold yourself accountable when you overspend. This ensures that you find a way to balance out the expenses that went overboard and that you stay on track.
- Automate Contributions
Put your finances on autopilot as it will tremendously simplify things. Direct a portion of each pay check into savings account, towards an extra payment on high-interest consumer debt or into an investment account. Catch-up with your retirement savings contributions to understand your options better.
Automating your bills will ensure they get paid on time without you wasting time on them every single month.
Lastly, set up automatic investing based on your risk tolerance, liquidity needs, portfolio size and time horizon. Ensure that you make automatic deposits into your investment accounts to be invested at predetermined times to prevent market timing.
Though it seems far off, your retirement planning will also benefit once you boost your savings - which is more important than you think as a YP. They say money doesn’t grow on trees, but it can definitely grow with careful planning, especially when you start early.
Rick Pendykoski is the owner of Self Directed Retirement Plans LLC, a retirement planning firm based in Goodyear, AZ. He has over three decades of experience working with investments and retirement planning, and over the last 10 years has turned his focus to self-directed accounts and alternative investments. Rick regularly posts helpful tips and articles on his blog at SD Retirement as well as Business.com, SAP, MoneyForLunch, Biggerpocket, SocialMediaToday and NuWireInvestor. If you need help and guidance with traditional or alternative investments, email him at email@example.com.