If you're feeling like you should be saving more for retirement, you're not alone. According to the Federal Reserve, about 63% of Americans feel like they're behind or uncertain. But there are some painless ways you can increase your savings without making sacrifices, cancelling your vacations, or giving up dining out.
These techniques can add a substantial amount to your savings, allowing you to either catch up on your retirement planning or get ahead, providing the possibility to retire early or with much more money when you do retire. The savings tips can help you save hundreds or even thousands of dollars per year without changing your lifestyle or being a miser. Let’s explore nine ways that will easily help you save more.
And the first one - Shop Your Insurance Around. Car insurance is one product that varies dramatically in price. One company could charge $50 per month, while a similar company could want $250 for the same coverage. That's why it's so important to shop around occasionally, such as once per year.
There are usually opportunities for discounts for bundles like homeowners, renters, or multiple vehicles, in addition to other discounts that might be offered. Also, take a look at your deductibles and coverage to make sure you're not paying for more than what's needed. You can either shop online for the best product or get in touch with an agency that will price a list of companies for you.
Next one - Claim the Full Employer Match. A 401(k), or employer-sponsored retirement plan, can be a great place to grab some free money. If your employer offers a 401(k), it's likely they match contributions that are made. Most commonly, the employer will match 50 percent of your contributions up to 6 percent of your salary.
For someone who earns $50,000 per year, the employer will contribute $1,500 per year toward your retirement. By not taking advantage of this benefit, you're simply leaving part of your pay on the table for your employer to keep. 401(k) contributions are also tax deductible, which will lower the amount you'll owe the IRS for that year.
Use Coupons and Immediately Invest the Difference. Coupons can help you save money both online and in-store. When you use them to reduce costs, don't just squander the savings. Immediately dedicate that money to a savings or investment account so it can be quickly put to work.
Also, shop around when buying an item online. Chances are there are many sellers with the same item, and many of them are willing to price match. Only use coupons on items that you would be purchasing anyway. Too often, people make unnecessary purchases simply because they have a coupon. You can also take advantage of those discounts to purchase extra items that you'll need in the near future, sparing you from paying full price.
Use Credit Card Rewards. Taking advantage of cash-back credit cards can add up over time. While somewhat controversial, credit cards can actually be used wisely, provided you don't carry a balance or purchase things you wouldn't otherwise buy in cash.
Depending on your typical expenses, you could get a cash-back card geared toward dining out, grocery shopping, gas, business expenses, and more. Once accumulated, most credit card companies allow you to deposit their rewards directly into another bank or investment account.
If you spend $30,000 per year and earn 2 percent cash back on those costs, that's about $50 per month. That won't make you rich, but it's extra money for basically nothing and, if invested, can provide great returns. Look for credit cards that pay a welcome bonus, often $200 or even $500. Of course, the key is to only use the credit cards for things you'd be purchasing anyway.
Next, Refinance Loans. Refinancing your home or car loan can still save you money, but only if you qualify for a lower interest rate than you're currently paying. Unlike a few years ago, interest rates are no longer at historic lows, so refinancing isn't automatically the right move. Compare your current rate with today's offers and calculate whether the monthly savings outweigh the closing costs, refinancing fees, or other charges.
For example, lowering the interest rate on a $300,000 mortgage by even one percentage point could save hundreds of dollars per month, depending on the loan term. However, make sure you'll stay in the home long enough to recover the refinancing costs.
Also, avoid resetting the clock on your mortgage. If you've already been paying a 30-year loan for several years and refinance into a new 30-year mortgage, you'll likely pay interest for a longer period and increase the total cost of the loan. If possible, choose a loan term that keeps your original payoff date or make extra principal payments to stay on track.
Reduce Expense Ratios. Fees are sometimes unavoidable when it comes to investing, but that doesn't mean you need to overpay. Optimize your retirement accounts so they're invested in products that have low expense ratios.
Most 401(k)s have low-cost options available. If not, consider rolling your 401(k) into an IRA if possible. Individual retirement accounts have nearly unlimited options, so there's no reason to pay high expense ratios, such as anything above 0.5 percent. Reducing these costs will make a huge difference in your portfolio, especially as it grows to six and seven figures. Vanguard has some excellent options that are very inexpensive. If you're someone who doesn't think twice about the fees being charged, do a quick calculation to determine how much you're actually paying.
Automate Bills for a Discount. Some companies will provide a discount or special bonus offer when you set up automatic billing online. This not only reduces paper waste for those who receive bills in the mail, but it also frees up time and energy that would otherwise be spent paying bills. Insurance companies sometimes knock up to 10% off your premium for paying for the policy in full instead of paying monthly. Phone providers also give discounts when you set up automatic billing. Banks often give discounts for loan payments that are automatic.
Sometimes it needs to be connected to a bank account instead of a credit card, but that only takes a couple of minutes. Companies have varying policies on discounts for this, but some of them are well worth it. Saving 10% on your insurance is a guaranteed 10 percent return, and you'll also eliminate the risk of being charged a late fee for forgetting to make a payment on time.
Adjust Tax Withholdings. Receiving a tax refund is a nice feeling, and in many cases it feels as though you just received a bonus check from the government, when in fact you loaned Uncle Sam that money for the year to use for free without interest. Ideally, you want to withhold the exact amount that you owe in taxes for the year and no more. By hanging on to the money throughout the year instead of receiving a refund, you get to use that cash by paying off debt or putting that money to work through investing.
Since receiving that check in the spring feels like a small windfall, you're more likely to spend it recklessly on a spring vacation or an expensive new toy. You tend to have a different perspective on the tax refund when you consider that it isn't something exciting but rather money you sent to the government for the entire year, and you couldn't earn interest on it.
Ask for a Raise. This is one tip that could help you double your annual savings. Employers will only pay as much money as required to retain their employees and will seldom hand out raises. It's common to see employers paying new hires more than their current experienced employees for the same job.
If you're not earning what you're worth, request a raise. The chances of your boss coming to you and raising your pay without asking are slim to none, so it's up to you to make your worth known. New employees earning more than a veteran for the same job is unfair and should not be accepted, especially considering high-quality employees traditionally earn more for their experience and loyalty.
Take a look at the job market and consider jumping ship if you cannot negotiate fair pay. The inconvenience of changing jobs will be worth it for a 5%, 10%, or 15% increase in pay, and that extra money can be easily directed toward investing since you were previously living on a lower amount.
