There are many reasons why people save money. For some, it is so they can enjoy a certain amount of financial confidence and freedom, while others squirrel away money for emergencies or future plans like the down payment for a home, college tuition, or a child’s wedding.
Saving money also has the potential to alleviate a certain amount of stress that comes with paying off or avoiding debt, meeting bill payments on time, taking vacations, purchasing birthday gifts, and more. Unfortunately, for many Americans, saving money may seem like an impossible task.
Theodore Roosevelt once quipped, “Nothing worthwhile comes easy.” This goes with saving money too. It will require you to make sacrifices; it will require discipline and commitment. If you are married or are in a long-term relationship, saving money becomes a team effort.
According to Market Watch, the median savings balance – not including retirement funds – of Americans under 35 is $3,240 annually, while those ages 55-64 are approximately $6,400. [i]
Dealing with finances and creating an adequate payment schedule based on one or two incomes is challenging, and seeking guidance from a financial professional is very beneficial. A financial professional has experience working with investments to meet your style and goals. They can identify your risk tolerance and help you with strategies that could work for you and your family.
Here are five tips that can help you begin saving money.
- Pay down your debt – A significant obstacle to being able to save as much as you want is debt. To pay down debt, there are different techniques you can apply. Two popular methods are the debt avalanche method (focusing on paying the loan with the highest interest rate first and working your way down to the smallest) and the debt snowball method (concentrating on paying off the most minor first and working up to the largest). While applying either scenario, you are still paying on all the debts you owe, just more toward one particular, depending on the method of choice.
- Cut back on eating out and unnecessary expenses –Everything is at our fingertips these days, including such luxuries as access to fast food and online shopping. However, regularly eating out and ordering food delivery can be expensive. You may be surprised by how much you can save by preparing your food at home, or not buying something just because you want it, like a fourth or fifth pair of shoes.
- You do not have to put away a lot at first to begin saving – Start with what you can, $10 a week or $25 a month. Set small achievable goals for yourself and, in time, you can increase the amount you save as the debt is paid down and you progress in your career. Even though it might not seem like much initially, you have to start somewhere. Money has a way of accumulating.
- Take a “staycation” this year – One way to potentially get ahead of the ball with your savings is to take a staycation when it comes time for a vacation. Take the money you would have spent on renting a place to stay, food, gas, and entertainment, and put it into your savings.
- Consider consulting a financial professional – Working to save money while staying on top of bills and juggling various expenses can be time-consuming and challenging. A financial professional has the experience to help you to develop a strategy that may assist in lowering stress for you and your family while allowing you to save as much money as possible in the long term.
Remember, a penny saved is a penny earned. If you are disciplined and have a plan, you can pursue the goal of saving money and watching it grow. Consult a financial professional today to get you started on this exciting journey.
Important Disclosures
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.
All information is believed to be from reliable sources; however LPL Financial makes no representation as to its completeness or accuracy.
This article was prepared by LPL Marketing Solutions
Footnotes:
[i] Average savings by age: How much to save in your 20s, 30s, 40s, 50s and 60s - MarketWatch
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