One way to accumulate assets for retirement, education, or other major goals is to reduce your spending. Studies have shown that these savings can add up over the years to a substantially increased nest egg.
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The familiar expression "A penny saved is a penny earned" overlooks the impact of taxes; a saved penny is, in fact, worth more, often much more, than an earned penny because you pay tax on an earned penny but not on the penny you save.
Thus, tax-free savings, with earnings compounding over the years, can really increase your nest egg, making it worthwhile to explore the following money-saving techniques.
This Financial Guide provides you with 10 tips for making sure that more of your money is slated for saving and investment. More important, it provides you with links to other Financial Guides that help you implement these tips and maximize the ultimate return.
While most people appreciate the importance of a financial plan, too many put it off to the tomorrow that never comes. It is important to identify your goals and determine how best to achieve them. A financial plan can help you do this.
Use an automatic savings plan to make sure that you save a percentage of your paycheck every payroll period. The percentage should be determined by your financial planning needs. Some people need to save 10 percent of their gross pay while others need to save more. If the amount saved goes to a 401(k) plan or another tax-deferred plan, so much the better.
But don't stop with automatic savings. Put aside everything you can. If you invest $50 a month in a mutual fund, you could have as much as $25,000 in ten years, depending on the rate of return.
To save interest, consider taking advantage of balance transfers, which offer a lower interest rate, typically zero percent (0%) for anyone with excellent credit and a stellar FICO score. You may have to pay a transaction fee of two to five percent (2-5%) on the amount transferred.
Cut your credit card fees and other costs by switching to a card that charges less interest or one that doesn't charge an annual fee. Better yet, pay cash (or use a debit card) to pay for your purchases and avoid credit cards altogether.
There are several ways to reduce your bank fees. Find out what you need to do to get free checking and free ATM usage and do it. You may also want to join a credit union instead of using a bank since credit unions typically charge less for banking services. Here are a few more tips:
Here are some ways to save on insurance of all types:
Your utility may have a program that subsidizes making your home more energy-efficient. Look into this possibility. Even if there is no help available from the utility, it is worth it to caulk your windows and make sure your insulation is a high enough "R" factor.
Here are some other ideas:
Today's cost-cutting competition among phone service providers offers many opportunities for savings on your phone bills, such as:
For instance, skip your yearly vacation this year or take a less expensive one. Another way to save on a large yearly expense is to swap an expensive health club membership for a membership at the YMCA or shop around. Many fitness facilities offer special rates for new members.