Saving is difficult in America today, and a lot of consumers are struggling to put money aside. We often run the risk of spending more than we earn, which leads to a budget deficit. Consider that the national personal savings rate has dipped to the lowest point since the Great Depression. We are also spending more than ever with today’s high energy, home, and food prices. We need to begin looking for ways to save, and the time is now. Living expenses will only increase as we near or enter retirement, and we want to make sure we are financially prepared.
Why saving strategies are important:
Saving strategies are crucial for your well-being. Let’s say you suffer a serious injury. Chances are, you will need to rely on your savings to help foot the medical bill. What if your injury puts you out of work for a while? Well, then savings can help cover your living expenses until you get back to work. If you aren’t thinking strategically and don’t plan for these events, you could find yourself in some real trouble.
One of the best saving strategies is to put money toward an emergency fund that you can rely on if you experience a financial setback. See what a Clearpoint Credit Counselor has to say about the importance of an emergency fund here.
Using smart saving strategies is critical during the good and bad financial milestones in life: losing a job, getting ready for retirement, and leaving a healthy financial legacy and inheritance for loved ones.
Saving leads to a comfortable retirement. Whether you’re already retired or won’t be for five, ten, or even twenty years, saving should always be part of your financial plan. Starting now can add up to make a big difference tomorrow.
Ways to Save
Now you know why you need to plan and make saving a financial priority. Here are some tips for how to set up and monitor this saving:
You can plan for saving each month by setting up automatic transfers with your bank. Most banks can automatically transfer funds from your checking account to your savings account, money market, mutual fund, or other account. You can also use this feature to set aside money each month in your emergency fund. Features like these offer some of the most convenient ways to save. Just make sure that you are monitoring these transactions and keeping a balanced budget.
Take advantage of tax-free saving whenever possible. Consider joining your employer’s 401(k) or other retirement plan. This type of plan allows you to make contributions that are tax-free, while other plans, like Roth IRAs, tax your contributions but give you tax-free withdrawals in retirement. Check out this retirement tool from Squared Away to learn more about these plans.
If you are able and the rest of your finances are in order, max out the amount you contribute to your retirement plan. Make sure you are setting aside enough to be eligible for any matching funds–this is free money and you do not want to leave any free money on the table!
Pay Yourself First
You’re probably inclined to pay everyone else first. Oftentimes, we pay our rent, our credit cards, and all our other bills before even thinking about the possibility of saving. But, it’s vital to start paying yourself first by saving money. This makes saving a priority and ensures you are able to set money aside. It’s the only way to ensure your financial longevity and well-being.
Establish an emergency fund, explore retirement plans and other ways to save, and continue to build your savings. Doing so will bring great benefits in the long run.