Every financial advisor or guru will say the word savings more than any other English language. The reason is that savings are important for financial freedom. Still, it is crucial to your future, and in case disaster strikes such as job loss, a broken-down vehicle, or an unforeseen medical expense. If you are not saving now, you need to start immediately. You don’t have to start with large and unreasonable amounts of money. It would be best if you eased into savings until you get used to being without the income in your personal operating costs and increase as you can.
You can do some things to increase savings may seem like they are obvious, and they are, but regardless of this, many don’t do them. An astounding amount of adults with great incomes fail to save any of it even though to do so would be simple. So for those that are not saving or saving enough, here are five ways you can start working towards financial freedom through some savvy savings ideas.
Retirement Fund
An amazing number of those saving nothing at all work for a company with at least one retirement fund, if not multiple retirement funds or other types of savings plans. The best thing about all of them is that they take it out of your paycheck before receiving it, so you don’t even miss it and are forced to adjust your budget around your adjusted income without it. If you are not contributing to your company offered a retirement fund, you should immediately make an appointment with the appropriate department to rectify this mistake.
If you are unsure how much to contribute, there are a few ways to decide. If your company will match up to a certain percentage, contribute at least that percentage; that match is free money. If they don’t offer a savings match, figure out the minimum you can live on from your income with some padding and contribute whatever percentage or fixed amount you have remaining. The truth is, you are not saving now, so any amount will be a vast improvement over zero.
Cut Expenses
Many people shy away from cutting expenses because, in this instant gratification, the high-consumption world we live in today, we often fulfill every desire of our heart when it comes to spending. In some cases, people spend outside their means for this fact. Now is the time for you to take yourself out of the race against the Joneses and create a budget so you can identify all your expenses, specifically the ones you can cut out.
It is not suggested you have no fun and don’t enjoy your life or hard-earned money. Rather, what is being suggested is that you don’t do so over having healthy savings. To do this, you need to create the dreaded budget, cut as many expenses as you can live without, and reallocate that money to debts first, then savings. If you have set up automatic savings account payments from your paycheck or other income with your banking institution, much like your savings at work, you won’t miss it and will adjust your budget around the new income without it.
Investments
Outside of the investments that would be made on your behalf through your retirement fund, you should participate in some level of personal investing. If you are a novice or don’t have a lot to invest, you should hire and consult a professional financial advisor or investment manager. This professional can help evaluate your risk tolerance and limits and make investments on your behalf accordingly. It is not to say you cannot or should not strike out on your own. However, unless you are knowledgeable in the intricacies of good investing, leave it to a pro.
Eradicate Debt
The easiest way to have income that can be put into your savings is to become debt-free. This freedom is not just beneficial to your savings account, but it is an accomplishment that can help you make big purchases such as a home or vehicle. Working towards eliminating debt and achieving it should be followed up with putting your new surplus into savings and then never allowing yourself to go into bad debt again. Getting into a mortgage or using credit to purchase a new vehicle is a good debt to carry as long as you pay it down as quickly as possible.
Savings Account(s)
There are many savings account types, some of which are lower in interest gains and lower risk. Others are investment savings accounts, which carry some risks but have higher interest payoffs. To decide what kind of savings account(s) to have, you should research the options, evaluate the risks or hire a professional financial advisor to help you decide best for you and your financial freedom.
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