One of the biggest mistakes a person makes is not saving money.
A 2019 survey done by Bankrate showed that 21% of Americans didn't have any savings. Another survey showed that less than half of American's had less than a $1000 saved.
Why is it so hard to save? There are a lot of reasons that experts will state. Not having a budget, not tracking where their money goes, having too much debt, blah blah blah.
I think the simplest reason is because its not any fun. It is a lot more fun to go to dinner, buy the new car, take the vacation, etc.
But, it is time for people to Do the Hard Things First. After you tithe (we will have future blogs on this topic) you need to save some % of money.
Put savings on autopilot, take it out of your control
Max Out Your 401(k)
The 401(k) is a very powerful saving tool.
First, it is automatic. The money comes out of your check and you don't have the option to spend. Second, the money is taken out pre-tax and the returns are not taxed. Also, many employers will contribute an amount that matches some % of the employees' contributions. These benefits are what make the 401(k) a powerful saving vehicle.
Step one of putting your savings on autopilot is to max out your contributions to your 401(k).
First, it is automatic. The money comes out of your check and you don't have the option to spend. Second, the money is taken out pre-tax and the returns are not taxed. Also, many employers will contribute an amount that matches some % of the employees' contributions. These benefits are what make the 401(k) a powerful saving vehicle.
Step one of putting your savings on autopilot is to max out your contributions to your 401(k).
Use Auto Savings Apps
I love technology and this has been one of my favorite ways to save. Here is one tool that I have been one of my favorite. I'll talk about others in future posts.
Acorns rounds up your purchases to the nearest dollar, then puts the “spare change” in an investment account. You almost don’t notice it happening. You can choose from different investment strategies from aggressive to conservative.
I’ve had my Acorns account for a couple of years. I started with an initial investment of $50 and it has grown to almost $2000 in two years just by rounding up purchases from my checking account. When you’re ready to withdraw your money, it’s in your account within a few days.
Acorns cost $1 a month if you have less than $5,000 invested or 0.25% a year for larger accounts. If you’re a student or under 24 years old, though, you can use it for free!
Use Direct Deposit
Another way to put savings on automatic pilot, like the 401(k), if you never have the money, you can't spend it.
Most companies will allow you to direct your paycheck deposit to multiple accounts. This way you will never see the money so it's like you never had it. This is a good strategy to start when you get a new job or get a raise. This is a way to not adjust your standard of living when you get an increase in salary.
Save Your Change
This may sound simple but if you just throw your change each day in a jar, it will add up. We always use the change in this jar as our spending money on our vacation each year. It is always a family project to roll it each year and see how much we have accumulated.
Saving is hard but if you make it automatic, you will be amazed how much you can accumulate.
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