4 ways to save $100 more each month
Small spending adjustments can add up to a big boost in your monthly savings. Consider using these strategies to find something that works for you.
Are you struggling to build an emergency fund or to save enough for retirement? If so, you're not alone: Some 42 percent of workers say they "usually or always" live paycheck-to-paycheck, according to data released by CareerBuilder in August 2011.
But putting aside just an additional $100 a month can potentially make a big difference, especially if you can invest it for your retirement. Allowed to grow over 20 years at a 7 percent rate of return, that $100 a month could add more than $52,000 to your retirement fund.
Try one — or all — of these four tips to get started.
1. Track your spending.
Pretty Mbanga-Nembaware, mother of five and a service coordinator at an automobile dealership in Plano, Texas, used a monthly budget worksheet and was able to save more than $600 a month. Once she began carefully tracking her family's spending, it was clear they were going overboard on lunches and movie outings.
Now, instead of spending $80 on movie tickets and concessions, the family rents movies and watches them at home. Says Mbanga-Nembaware: "With that worksheet, I ask myself, 'Do I really need this?' and I compare how much I'm saving each month."
» Use our budget calculator to track your monthly spending.
2. Rethink mealtime.
In 2010, the average American spent $2,505 dining out, according to the Bureau of Labor Statistics. Mbanga-Nembaware's family has cut back on restaurant meals and now enjoys eating at home more often. They also pay more attention to portion sizes, wasting less food. "We started getting more canned foods because the portions are just enough for the meal," she says.
3. Automate your savings.
If your paycheck burns a hole in your pocket, consider creating a savings account that's funded with automatic withdrawals, says Joe Swanson, a Minneapolis-based financial professional with the Principal Financial Group®.
That could be as simple as setting up a monthly automated transfer from your checking account to your savings account. Some organizations will allow you to automatically direct money from your paycheck to an investment account. Also make sure you're taking advantage of the payroll salary deferral contributions to your organization's retirement plan.
4. Get accountable.
Writing down your financial goals and sharing them with others makes those goals more concrete. Ask your spouse, a friend or your financial professional to check in with you at determined intervals (a few times a year, annually or every few years) to ask if you're on track.
Save for retirement, too.
Saving an extra $100 a month is terrific. But how much of your income should you be saving to fund your retirement? First, it's important to consider your goals and what your expenses may be in retirement. Here's something to keep in mind: In a recent survey of financial professionals, the median response indicated that individuals need to save approximately 15 percent of their pay per year, including their organization's contributions (if applicable), to have enough income during retirement, assuming they start saving early in their career.
Need help getting there? Consider using our interactive retirement planning tool to get started.
- The assumed rate of return in this example is hypothetical and does not guarantee any future returns nor represent the returns of any particular investment. Amounts shown do not reflect the impact of taxes on pre-tax distributions. Individual taxpayer circumstances may vary. This is for illustrative purposes only.
- http://www.bls.gov/news.release/cesan.nr0.htm , Bureau of Labor Statistics, September, 27, 2011.
- America Rebuilds Research with Financial Advisors, June 2011, conducted by Harris Interactive on behalf of the Principal Financial Group®. When looking at all responses in the survey, the median is the middle of the responses given.
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