To save money and live better is not an easy task,
“Nearly everyone wants to save more money for retirement, but no matter how much you’re earning, it’s not easy. Roughly a quarter of American households earning $150,000 per year or more are living paycheck to paycheck, a survey from Nielsen Global Consumer Insights found. A third of households earning between $50,000 and $100,000 per year are also struggling financially, as well as approximately half of those earning less than $50,000.
Part of the reason saving is so hard may be that you don’t feel like you have enough cash left over after paying all your bills. But it’s also possible you may be struggling because your saving strategies are working against you. By doing any of these three things, you may be hurting your savings more than you think.
When money is tight and you’re trying to save for the future, it’s tempting to put all your spare cash straight toward your retirement fund. Congratulations for realizing the importance of saving now to reap the rewards later.
However, if you don’t also have a solid emergency fund, you could unintentionally be putting those savings in jeopardy. Without an emergency fund, when an unexpected expense pops up — whether your car breaks down, you lose your job, or your kid breaks an arm — you’ll have no choice but to pull the money from your retirement savings.
While establishing an emergency fund means you can’t save as much for retirement in the short term, it ensures your savings can remain untouched so it can grow faster. Thanks to the power of compound interest, the longer your money is left alone, the more it will grow. If you’re repeatedly withdrawing from your retirement account every time you’re faced with an unexpected cost, it will only hurt your savings over the long run.”
However, with some efforts, saving for retirement is achievable, even at an early age.
“Three years ago, I made a deal with myself: I wanted to have $100,000 saved when I’m 25. But I didn’t mind if it didn’t happen until the day before my 26th birthday.
About a year ago, I reviewed my rate of savings and investments and realized that although I haven’t made more than $80,000 a year for the past three years, I was on track to save $100,000. With only a car loan away from being debt-free, I’ve got another year and $10,000 to go!
I want to acknowledge that privilege is a key part of my story. I’m white, I come from a middle-class family, and I was able to graduate college without any debt. All these things helped a great deal. I owe my interest in saving money to my parents, who made sure I had a strong financial education at a young age.
I’ve been fortunate. But it also takes a lot of hard work, sacrifice, and responsibility to save and maximize your earnings. Knowing that I’ll be prepared for whatever life throws my way fuels my drive to keep making smart financial decisions. Here’s how I’m getting to $100,000.
This kick-started my journey towards six figures. In addition to saving the majority of my 9-5 salary, my first year of freelance social media marketing made me quite a bit of cash that I could immediately save. I was able to establish both a SEP IRA and a fully funded emergency fund with my earnings.”
Once you manage to save some money, you should compound it by using a high-interest money market account,
“If you have money in savings, or are working to boost your savings balances, it’s important to choose the right account. Among savings accounts, money market accounts can offer even better interest rates than regular savings.
Here are five good uses for a high-interest money market account that you may want to consider.
The average interest rate in the US is currently around 0.10% — yes, that’s one-tenth of 1%. At some of the biggest banks in the country, the rate is as low as 0.01%. You can’t get any closer to zero without adding a new digit! That interest rate is really, really low.
On the other hand, high-yield accounts currently pay around 2% or more, which is as much as 200 times as much as the lowest-paying accounts. If you are retired and want to keep a lot of cash on hand, a high-yield account is perfect because it will give you the maximum return on your cash with the lowest possible risk.
In his book ” I Will Teach You To Be Rich,” author Ramit Sethi showed an example of how you can save for a wedding, travel, and other future expenses automatically using multiple savings accounts. If you open an account for each unique goal, you can create automatic transfers every payday that will move the funds without your having to remember or lift a finger.
When you put the money into dedicated high-yield money market savings accounts, you are less tempted to use the funds for anything else. And like other use cases, you get the best interest rates while keeping your money very safe.
My wife’s family made their living in real estate, and now we are interested in adding real estate to our investment portfolio. But unlike a stock or ETF, I can’t buy a rental property with a few thousand dollars. We need to save up a bigger down payment to make our real estate plans come true.
We have a good start on the down payment for a second property, but we are not there yet. In the meantime, our funds are sitting in a high-yield money market account at Capital One Bank earning us a little something in the meantime.”
Thank you for reading this post, don't forget to subscribe!