Seven Smart Changes to Make to Start Saving for Retirement

Smart Savings

Make no mistake, the power of compound interest is bigger than you may think. The best day to start saving for your retirement is on the first day of your first job, and the next best day is the soonest day when you possibly can start. Even if contributions begin as small drops, those can quickly accumulate into a bucket of future security for you and your family. Many people don’t save because they think there’s no room in their budget, but with little changes and some planning, you would be surprised at what opens up. Not sure how to begin? Here are seven ways:

1. Save First

The best way to make room in your budget for savings and retirement is to make them the first thing taken out of your account. Many retirement programs both private and ones at work take a percentage of your paycheck, so if you start small with one or two percent, you probably won’t even miss it.

2. Use Cash

Another way to make sure there’s enough room is to set your budget for extraneous items like coffee and restaurants, and to take that money out in cash each week. This will prevent overspending and cutting into your savings budget.

3. Consolidate

If you have multiple debts that are stressing you out, consider consolidating all of them into one debt. Unsecured debts are usually on par with credit card interest rates. However, if you can put it into a lower interest secured location like a home equity loan, it can make a big difference in your monthly payments, leaving more for retirement.

4. Round it Up

There are a number of savings programs out there now that will take your purchases and round them up to the next dollar, then put those pennies into savings for you. If you make a lot of small payments, this is a great way to save. This is effortlessly done by banking programs who will automatically do it, or by the finance apps for smartphones. Simply link your credit cards and bank accounts, and it will keep a record of your purchases, and make a purchase totaling your roundup minimum once you reach it. This is usually around $5-10.

5. Sell Stuff

If you want to have a little extra money to put toward savings, consider selling some of the things you don’t want anymore online. Craigslist and eBay are two great choices if you are selling things in their natural state. If you have antiques, refurbished or not, or craftier items, then a website like Etsy might be a better choice. Either way, it’s a quick way to get cash or savings.

6. Do Free Stuff

If you find that a large amount of your money is going to entertainment, then you might want to incorporate more free stuff. Running outside over a gym membership, libraries over bookstores, and free cultural events over movies are just some of the ways to accomplish this. Even cutting back on paid-ticket events by half can make a big difference over time.

7. Ignore Raises

If you are in a business that gives annual cost of living raises, then begin to ignore them, and put them into your retirement instead. This will feel like no change for your daily life, but a big change for your retirement. If you are facing annual rent increases or other costs that makes it hard to function like this, consider using half of the increase for retirement, and the other half for your living expenses. That will allow you to enjoy the raise, but also to save more before you miss the money.

The biggest trick to saving more is simply to make it as if the money was never there in the first place. Saving first to take away the temptation, rigid spending limits limited by cash, selling what you had and auto-saving are just a few of the ways that you can help yourself into a secure retirement. Don’t wait, though. Start today.

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