Most retirement advice centers around our investments. We talk about how to best diversify our capital, which funds we should invest in, and how to maximize and grow what we've already contributed. Yet, most people who have created a comfortable retirement are not investment geniuses. They simply lived below their means and amassed their fortunes over time.
The most significant factor that determines whether someone can retire comfortably is how much they save. Here are nine suggestions that will help you save more money this year.
Set a limit on your spending. Tracking spending can be difficult. But if you can get a rough idea of how much you spend and put a cap on it every month, your future self will thank you. Another benefit of setting a limit and thinking about where you are spending money regularly is that it reduces the likelihood of lifestyle inflation. Remember when you first got out of college and had much less income? You were living fine then too.
Pay yourself first. If you don't see the money, you really won't miss it. Set your account up so money is automatically transferred to a savings or investment account. Better yet, have your paycheck go directly into your savings account and just transfer a portion of it to your checking account and use that as your budget.
Consolidate your accounts when appropriate. Having many of your investments housed with the same financial institution can sometimes net you bigger savings. Perhaps you can pay off a bit more of your mortgage and avoid paying for private mortgage insurance. And sometimes if you consolidate your savings into one account, you will get a higher interest rate. Occasionally, one plus one actually equals more than two.
Make more money. Consider starting a side business to make extra money. Not all of your ideas will take off. But with persistence and hard work, you will make more money. Keep at it and you will retire more comfortably.
Eliminate a few little expenses. Lattes are not the only small expenses you can cut out of your budget. Look at all the fees that you've paid in the last 6 months. Were they really necessary? Can you do anything to minimize fees and investment costs? A few dollars per fee won't seem like much, but add in a few years of these fees and you can be looking at a pretty big balance.
Consolidate your debt. With outfits like Lending Club and the resurgence of 0 percent balance transfer offers, it makes no sense to pay 10 percent or higher interest on your credit card debt. Look for easy ways to consolidate your debt and you may be able to eliminate years worth of interest payments.
Be wary of depreciation. It's okay to buy luxury goods. But it's a problem when you keep buying them to replace what you already have, especially with big ticket items like cars. Either buy a great car and drive it for many years, or buy a less expensive car so you can change it frequently. Better yet, buy a used car and drive it for many years. That way someone else took the hit on depreciation.
Take advantage of tax breaks. Consider contributing to an IRA or Roth IRA before you file your taxes this year. Also work toward maxing out your retirement account at work. The government created these tax breaks to encourage citizens to save for retirement. Contribute.
Look for low-cost alternatives. Almost everyone can find a cheaper alternative for many of the activities they enjoy. Eliminate your cable TV bill and join services like Netflix, which is currently offering a one month free trial. Or if you use a ton of ink cartridges every month, try these 123inkjets coupon codes to save some money by buying generic.
Seeking investment advice is a great idea, but you can’t control the stock market’s performance. Work on increasing your income or reducing expenses because that's much easier to control.
David Ning runs MoneyNing, a personal finance site aimed at helping others change their habits for a better financial future. He suggests that everyone to sign up for an online savings account to get more out of our hard earned money.