Many of our clients want to save more. These 5 tips will inspire you save more for retirement and other goals while minimizing your anxiety!
- Understand that there are only two ways to increase savings Earn more or Spend less. Enough said…no fairy dust.
- Understand the concept of Retirement It’s important to know why you are saving. Think about it…if you start working and saving at 30 and you plan to retire at 65 and you live till 95 you have 35 years to save enough money to live on for 30 years. Social Security is designed to provide about a third of your need in retirement, the rest comes from pensions and/or savings.
- Have an Emergency Fund Having 3-6 months of expenses in a savings account helps you save for the long-term and protects you and your family in case of emergencies. Without an emergency fund, small problems like a lost job, a car breaking down, a tree falling on your house, or an illness, can become major life setbacks.
- Create a Real Spending Plan Monitor your actual spending and saving for 3 months and create a monthly and annual spending plan using these actual numbers. You may not like these numbers but this is your reality. By studying where you spend you can make changes that have real impact instead of wondering where your money is going.
- Accrue funds for large non-monthly expenses Put money aside each month for your non-monthly large expenses. Vacations, holiday spending, home improvements and summer camp are large expenses that seem like unwelcome shocks to many people. Instead of being surprised and eating ramen noodles the months after your vacation, calculate your annual spending on vacations and transfer 1/12 of that amount out of your pay every month to a separate savings account.
We hope these tips help. Good Luck!
Carolyn and Beth