No one knows what the future may hold; it could be amazing with many new opportunities opening, or it could bring challenging situations. That’s why I have always found it best to have a financial safety net for anything that could happen. And the best way to save money for the future is to just start now where you are.
Wait… But how? Saving money for the future is mainly reliant on your money mindset, you have to WANT to prioritize saving over spending. So how can I start? Make little changes to your everyday routines. Ex. Pack lunch instead of buying it. Stop ordering things you don’t need online!
Okay, but I don’t spend that much. You would be surprised how these things add up! Think about if you spend $5 on lunch every day. Multiply that by 5 days per week and 4 weeks per month, and you’ve spent $100 that you could have saved.
It’s these little changes that add up over time and allow you to make big savings goals for your future.
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How can saving money help you in the future?
The year 2020 has shown many people the importance of saving money for the future. According to the U.S. Bureau of Labor Statistics, the unemployment rate was up to 14.7% in May, and even in October at 6.9%, it is still double that rate from February.
This is a prime example of why it’s important to save, it helps you live a life without worry. Unemployment, health conditions, and other circumstances can pop up at any time and it’s important to not be caught unprepared.
Saving money for the future is important not only for when you get older, but also for things that happen in a year, a week, or tomorrow.
Ways to Save Money for the Future
Okay, do you have your mind on the task at hand? Are you ready to give it all you’ve got?
1. Make a Budget
Work with your partner or other household members to create a budget. Be sure to add in all your monthly costs and the ones that don’t occur as frequently too. Ex. Oil changes.
For infrequent costs, you can take the amount and split it over the months. For example: If you get an oil change every 3 months for $60, you can put $20/month towards it.
Try to save at least 10% of your income every month. In my budget, I like to put aside 20% for savings. Here are some free budget printables to get started!
2. Reduce Expenses
Hopefully, you took my advice and are already thinking of small ways to change your spending and save more. Now, take a look at the budget you made; where can you reduce your monthly spending?
Here are some ideas:
- Food is one of the largest money-eaters every month. How can you spend less? Take a look at my grocery list for 2 on a budget for my $200/month shopping list at meal ideas.
- Do you have any subscription services that you could do without? You can also cut the cord and switch to an internet streaming service such as Philo and save money (free 7-day trial).
- Here’s a list of other realistic ways to save money every day in my guide to living cheaply.
3. Make Saving Automatic
“Out of sight, out of mind.”
It’s hard to miss the money if you don’t see it! And you can’t spend what is not available to you.
That’s why one of the best saving tips I can give you is to automate your savings! Set up another bank account and have your savings sent to it with an automatic transfer or by setting it up with your direct deposit.
I like to go a step further and separate my expenses into different accounts as well. I have money transferred to an account for my “stable bills” such as rent, cellphone, etc. They are set to auto-pay, which sometimes gives you a discount as well.
My “varying” expenses are in another account that I spend from. This includes buying groceries, household items, entertainment, etc. Once this money is done, that’s it for the month, but all my bills and savings are taken care of already.
4. Set Goals
Setting goals can help you stay focused and provide motivation. When you have something to save for, figure out the amount you’ll need to save and how long that will take.
|Short-term Goals||Long-term Goals|
Breaking up long goals into smaller parts can also provide you with the sense of achievement needed for motivation. Here are some money saving challenges to help you stay on track!
5. Make Use of Retirement Accounts
Save for your future by investing in retirement accounts. This is an especially great idea if our employer matches your contributions; why not take advantage of that free money?
Retirement accounts are also a great way to lower your tax bracket and the amount of taxes that you’ll have to pay for the year.
6. Choose the Right Savings Vehicle
The best way to save money in the bank is to park your money in a place that will allow you to make the greatest use of it.
A regular savings account or high-yield savings account is good for short-term goals where the money will be needed within a year. It is also better for your emergency savings to be accessible at any time. Ex. American Express is a bank that has a HYSA option.
Opening up a Certificate of Deposit (CD) is a better place to park your money when you have a long-term goal and won’t need the money immediately. CDs have better interest gains but your money is locked in for a fixed term of 6 months to 5 years.
There are also different retirement accounts that you can invest in. A 401(k) is good to invest pre-tax money in to lower our income bracket for the year. However, a Roth IRA is better to invest after-tax money into; which is great if your income bracket will be higher in the future.
It’s best to speak to a financial advisor to make the best use of your money for the future. There are various other types of savings accounts that you can choose from as they align with your goals. You can also open multiple accounts for different objectives.
Saving for the future is important if you want to live a worry-free lifestyle. The benefits of being able to circumvent that stress when an emergency arises is endless!
So don’t wait to get started. Even if you’re on a tight budget, just do what you can because every little bit you can contribute to your future savings counts.