Thinking right now of all the things I want to buy right this very minute and enjoy right now especially when you work so hard makes it so hard to think long term savings but it’s more important than ever before. However, there is real value in saving money.
First, by setting up an emergency fund, you can reduce the fear of the unexpected. You’ll feel a deeper sense of security knowing you have money in reserve to cover those costs. Second, by establishing a regular savings account, you can avoid relying on credit for many purchases.
As Tennessee Williams said, “You can be young without money, but you can’t be old without it.”
By opening a retirement account and making regular contributions, you reduce the need to work past your expected retirement age and enable yourself to actually enjoy those years.
At the beginning of the year, I started with a money audit. This was as simple as checking my mobile banking apps (Chime) and writing down my current bank balance. This lets me know where I was starting from and at the end of the year, I will know just how far I’ve come.
Since you are gathering information for taxes at the start of the year, it’s a good time to get some advice from a tax accountant or bookkeeper about tax-deferred financial strategies.
Employing those strategies helps you reduce your tax burden while simultaneously setting aside money for retirement. Your accounting professional can recommend the exact type of retirement account for your specific financial situation.
Your next step will be to create a real budget. Your budget should consist of monthly expenses like rent or mortgage, utilities, car payments, credit card bills and more. You will also need to account for other costs, such as grocery shopping, entertainment, clothes, travel, and gifts.
In doing this you might want to review your old bank statements and credit card bills to gage where you are with regards to your spending patterns. This will tell you where you exceeded your budget or actually spent less.
Treat your spending like a business. Try to cut costs. Money in the bank looks so much better than those new shoes you’re wearing. Focus on reigning in your expenses and putting the money into your three savings funnels.
Next work on what expenses you can reduce such as your home or auto insurance. Also, work on cutting the cord on expensive cable or satellite service and choosing lower-cost streaming choices. Be more mindful with all purchases, from groceries to gifts, and comply with your budget at all times.
Use some of the money you save to pay down any debt, such as credit cards and loans.
When those expenses are finally exterminated, you’ll net even more money you can then direct into your savings.
Make sure you stay informed on any changes to laws, regulations or rules that may impact how you save money.
At the end of 2019, review your results, compare to your budget, and see how much you have saved during the year.
You may find your mindset changes after seeing what’s in the bank.
Assess the entire year.
You definitely will have more insight into further improvements you can make in the next year and the next and eventually you’re going to get where it is you’re going!