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3 Tips On Saving For The Future

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If you’re convinced that your job is secure, saving money may seem less important than it really is. It’s easy to think you can put it off when you’re young and things are going well. However, someday you’re going to retire and you’ll need money to live on. As if that weren’t enough, circumstances can change, whether it’s with your job or your health.

3 Tips On Saving For The Future

Here are 3 tips on saving for the future:

Pay Yourself First

Instead of paying your bills first and splurging with the rest, invest it in your future. If you’re living paycheck to paycheck, you’re losing valuable time setting money aside. You have two important things to consider: an emergency fund and your [retirement].

For emergencies, experts recommend saving enough money to keep you afloat for at least 6 months. If your spouse isn’t working, save enough for at least 9 months. It sounds difficult, but you won’t regret it if a catastrophe should ever strike.

For retirement, the rule of thumb is to save the first 10 percent and live off the rest. It takes discipline, but you’ll get used to it. If 10 percent is too much, try 5 percent, or even 1 percent. The point is to get into the habit of paying yourself first, even if you have to start small. Put the money in a retirement account, such as an IRA, through which the money can be invested in stocks, bonds and mutual funds.

Consider depositing all bonuses, raises and refunds into your savings, as well.

Make it Painless

The more painless the process is, the better. List all your expenses and figure out what you can do without. Remember, there was once a time when people made their own coffee, rather than paying $5 for a double-latte. It doesn’t hurt to pack your own lunches, either. However, you don’t have to go “cold-turkey.”

Start small, by [taking your lunch] twice a week and make your own coffee every other day. Find a cheaper apartment and a better cellphone plan. Keep cutting expenses until you can trim off 10 to 15 percent of your income. Put 10 percent into the retirement savings and the rest into the emergency fund. With cheaper alternatives, you might find yourself living better on 90 percent of your income than you did on 100 percent.

Automate Your Savings Transfers

The best way to avoid spending that money is to set it up for an automatic transfer to your [share savings account] as soon as you get paid. This ensures that it’s instantly separated from the rest of your funds. You’ll never miss it and your savings account will grow unnoticed, in the background.

It’s your money and it’s up to you to make wise financial decisions. Remember that if your company goes under or you get laid off, you still have to pay the bills. That’s all the more reason to trim off unnecessary expenses and maximize your savings.