Saving for the future involves planning, and a dedication to a better life down the road. While it can be difficult to aimlessly save, it is important to have a clear cut goal, and continue to work towards that plan on a daily basis. Some of these goals are simple, and can start with a new computer, or a vacation getaway. Regardless of the item, the most important element here is getting into the habit of saving. Let’s go over a few simple ways to help you save for the future –
1) Open an online savings account that has a high-yield interest. These accounts are great, because they allow you to pay yourself first. Each paycheck allocate a certain amount of money to be placed into the account. When the year ends you will have accrued compounded interest on the account that can be put towards debt, or purchasing a new item for your home.
$50 dollars a month at .8% a month (given you started at $0) would equal = $630.80 at the end of the year
2) Open a money market account that allows you to make safe investments for the future. Most individual brokerage accounts allow you to open for $25 or less. Not only do you receive interest on your deposits, for you able to make safe investments into your future. Here you can purchase mutual funds, and allow them to mature over time. These accounts are self-directed and do not cost anything to maintain. You are able to purchase investments that will grow over time, and you can easily monitor them through apps on phones or through websites. Additionally, at the end of each year, mutual funds pay dividends which can equal 10% of your investment, and they grow over time.
A $300 dollar initial investment into a mutual fund may purchase 10 shares of that fund.
– If each share of that fund costs $30 you will have 10 shares. Over the course of the year, those shares may grow to $15, and you will have gained $50 on your $300 investment.
– At the end of the year, the mutual fund pays a yearly dividend, and you may gain another $25 to $50. By the end of 12 months, your simple $300 investment may be worth $375 to $400.
3) Cut expenses. Find different areas in your life to reduce your overhead. Pay off credit cards, and reduce expenditures that are not necessary. This will allow you to save more, and be able to enjoy life.
– Cut rent. This immediately reduces overhead, and allows you to save more. Paying $1500 for a 1 bedroom? You can easily find one for $1200, and you can save the rest. Most apartments are comparable to one another, and you may not need to sacrifice amenities. Don’t want to downsize? Find a roommate. You can find a 2 bedroom for $2000, and split it down the middle. It will reduce your overhead by $200 to $500.
– Pay off your credit cards. $1000 at 12% will cost you $120 a year plus membership fees. Reducing this down to a monthly purchase will allow you live off your cash, and not maintain any liabilities.
Here are some easy ways to review, and save money. These are some tasks that may take some time to incorporate into habit, and as you are able to complete these tasks; you will see your monthly cash flow increase.
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