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The Smart Ways to Save Money Fast (Even If You’re a Big Spender)

The Smart Ways to Save Money Fast (Even If You’re a Big Spender)

Are you under the constant impression that you are barely making ends meet? It is almost impossible to treat yourself with something expensive, as you seem to have just enough money to get by through the month.[1]

Also, you have no major expenses on a daily basis, you pay the bills, you eat out maybe once or twice, and then you get your monthly subscriptions and maybe one or two new items. Yet, you still end up wondering where all your money went.

Furthermore, it has definitely occurred to you that you might need to get credit at some point, either for a new car or for an apartment, and that requires a positive credit history. All of these are valid and troublesome concerns, especially if you don’t have at least $1000 in your savings account.

So, here, we will go over how to increase your savings and become more prudent, as well as why saving money is tricky but necessary.

I got it, we save money today to prepare for a better future.

We are all fully aware of the reasons why it is important to save money. For starters, it is the first and most important step towards financial independence.

The second reason is that we need savings in the event things go south for some reason, or if we need money to buy or repair a piece of equipment that is necessary for our work or of us to earn money.

Lastly, you need to know how to properly manage your finances in order to have a positive credit score, which will make it easier for you to get a loan if you ever need one, and you will also have lower interest rates when returning that money.

But saving money always seems to be so difficult…

One of the main reasons why saving has become more difficult is due to micro transactions and monthly subscriptions.

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If you want to save money, you need to give up a magnitude of smaller things rather than one or two of them. In other words, any attempt to save money by cancelling one subscription for example seems meaningless, since you aren’t saving a lot to begin with.

Another reason why we struggle with saving cash is because of our daily habits. We have developed certain tastes, and certain rituals that we tend to indulge on a daily basis, so very often, saving money warrants a fundamental change and people are not really fond of them in general.

Moreover, if you have a lot of bills that require immediate attention, it is difficult to think about saving money, when there are clearly more pressing matters.

So, spending money provides us with short-term positive feelings that we have kind of grown addicted to, whereas saving money does not. So, we are in a way stuck in this hedonistic treadmill,[2] and we just continue to live on paycheck to paycheck.

What can I do to start saving money?

Now let us go over some of the techniques, habits, and tricks on how to start saving money on a monthly basis. If you somehow manage to adhere to all of these tips, you can look forward to a significant amount of cash. However, we are all aware just how difficult it can be to drastically change your life, so you can also introduce these new methods one at a time.

1. Say no to extended warranties.

Whenever we buy something we want to make sure that the item is high quality and that it will serve us for months or years to come. As a result, we are very often tempted to buy extended warranty, which is, in a way, a waste of cash.

First of all, if you are not particularly clumsy and if you do not cash in on your extended warranty, then there is no need to get one in the first place.

Second, we hate using the same thing for more than a year, so it is very likely that you will buy a new item or gadget even if the old one is still working.

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2. Buy refurbished gadgets.

Here is a really good way to save a significant amount of money and get good products at the same time. We usually pay more for something just because it has a strong and well-known brand name behind it.

There is no reason to think of that as a bad choice; after all, a renowned brand means greater security, but it also means that it has good products in general.

In other words, buying branded refurbished gadgets can help you get amazing and useful tech without spending a fortune on it.

The downside of it is that you will not be up to date with the latest product, but eventually, they will be available as a refurbished phone or tablet, or any other gadget.

It is a good way to test yourself if you are buying out of peer pressure and to stay relevant, or if you are buying because you are acting on impulse.

3. Make it a weekly challenge.

A very useful trick for saving extra cash on a monthly basis is the so called weekly challenge. Much like with any game there are the easy, normal and hard mode, and this is how it is done. Basically, you set a weekly sum for yourself that you need to put aside at the end of the week.

You can go with $1, $5, or $10. The key is to double the amount at the end of the next week and so on until the end of the month. So with $5, you have $5 at the end of first week, $10 at the end of second one, $20 at the end of third and $40 at the end of the month.

This is why it is way more difficult to pull it off with $10 as your starting sum. It is a really good way of saving money, and you need to invest it with the rest of your savings into your savings account, in order to accumulate a more significant savings stash.

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4. Train yourself to be more patient.

Patience is a virtue and for a good reason.[3] When it comes to saving money, you can save a lot if you are patient.

First of all, it gives you more time to research and discover better items at a more available price.

Second, you can wait until there is a sales incentive or discount at the store before you buy something expensive.

Third, many stores offer discounts if you purchase multiple products, so it is better to save money and then purchase in bulk because you are going to save more this way.

5. Save your spendings on transport.

We tend to spend a lot of cash on transport, whether we’re buying gas, or even worse, if we use a cab to get by.

If you make a deal with friends from work to car pool, you can reduce the carbon footprint by relying on one vehicle, and you can save money on gas.

If you spend too much money on taxis, then you should immediately switch to public transport. This is far more convenient and cheaper, plus when the traffic is busy, you will actually get to where you need to be more quickly.

Simply get a monthly pass, or store value on your metrocard to save more money and start walking a bit; it will do you good. Alternatively, you can buy a bicycle and use it to commute; it is also convenient, cheaper, and great for your health.

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6. Cancel unnecessary subscription.

As mentioned, a great portion of our funds is funnelled away due to our monthly subscriptions that we do not even fully use. So, limit yourself to a single subscription that you are going to like the most during one particular month.

Private networks like hulu or Netflix usually announce what their users can expect in the upcoming month, so you can check that content in advance and decide which network you are going to use for that month.

7. Don’t pay for brand names.

We tend to pay a lot for big names and influential brands, and these products are usually overpriced for no reason. Sure, you might want a particular phone or PC to have strong components and, since it is a long term investment, you do not mind spending a bit extra.

However, when it comes to chargers, HDMI cables, headphones, or adapters, you can find decent products at a lower price that are going to get the job done. So, when you are buying something, it does not need to be from an expensive producer at all costs, and you can save a lot if you opt for less known, yet still competent providers.

8. Avoid eating out.

One way of committing financial suicide is by eating out frequently. Sure, we love the service, and that food is instantly prepared, but as mentioned, it is important that we practice patience in order for this to succeed.

It is far cheaper and healthier to prepare your own meals, plus you get to learn how to cook.[4]Today, we have pages and video clips that help us prepare meals, so there is really a small chance that you can mess it up, considering the amount of instructions you can get.

9. Consider energy saving appliances.

Finally, the money you save can be invested into energy conserving appliances and this helps you reduce the amount of money you pay for the bills. You can get energy saving light bulbs, as well as other appliances that spend less electricity, and you can even buy solar panels at one point.

Moreover, you can check your electricity provider to see how much they charge and switch to another one in your area that charges less.

Well these were the tips that can help you save money; you should also make sure to look up how to earn extra money online, just so that you create an even bigger savings account.

Some of these don’t require too much effort, others may include learning new skills, but mostly, it’s about practicing patience and restraint. Hopefully, you will find this article insightful and inspiring, and it will help you save some money.

Reference

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Nemanja Manojlovic

Editor at MyCity Web

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Published on May 7, 2019

How to Invest for Retirement (The Smart and Stress-Free Way)

How to Invest for Retirement (The Smart and Stress-Free Way)

When it comes to stocks, I bet you feel like you have no idea what you’re doing.

Everyone who’s not a financial expert has been there. I’ve been there. But, time is passing and you need to be crystal clear with how you’re investing for your retirement.

Otherwise, it’s back to work until you can afford not to. So, how can you invest for retirement when you’re not a financial expert?

You take the time to learn the fundamentals well. If you do, you can grow your wealth and retire happy. The best part is that you don’t need to be a financial expert to make smart investment decisions.

Here’s how to invest for retirement the smart and stress-free way:

1. Know Clearly Why You Invest

Odds are you already know why should invest for retirement.

But, maybe you know the wrong reasons. It’s time you get clear on why you’d like to retire. Here are some questions to help you get started:

  • Will you spend more time with your family?
  • What does retirement mean to you?
  • Are you looking to launch that business you’ve been holding off for years?

Everyone wants to retire but not for the same reasons. Once you’re clear for why retirement is important for you, you’ll focus on making it happen.

Investing in the stock market allows you to take advantage of compound interest.[1] All this means is that your money earns money on top of its interest. A reason why investment in the stock market is one of the best ways to plan for retirement.

2. Figure out When to Invest

“The best time to plant a tree was 20 years ago. The second best time is now.”– Chinese Proverb

It’s true if you’d had started investing when you were 10 years old, you’d have a lot more money than you do today.

The reality is that most people don’t start investing until it’s too late. So, if you’re currently waiting for the perfect time to start an investment, it would be today. Open your calendar and block out 2 to 3 hours to choose how you’ll invest for retirement.

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A quick way to get a snapshot of where you stand is to use Personal Capital. Input all your personal information and spend some time setting your retirement goals. Once completed, you’ll know where you stand with your retirement.

Having a savings account for retirement isn’t planning for retirement. Why? Your money loses value when you factor in US inflation.[2]

3. Evaluate Your Risk Tolerance to Create the Perfect Portfolio

Investing your money well depends on your emotions.

Why?

Because when the market drops most people panic and withdraw their money. On average, the US stock market yields an annual 6% to 7% ROI (return on your investment.) But, this won’t happen if you’re worried about short-term loses.

Before you invest your next dollar, know your risk tolerance.[3] Your risk tolerance determines the number of risky and safe investments you’d have.

Regardless of your investing style, you need to view investing for retirement as a long term game. Know that some years you’ll lose money but recoup this in the long-term.

Avoid watching market-related new. Also, create a double authentication to log in your investment account. This way you’re less likely to withdraw your money.

4. Open a Reliable Retirement Account

Depending on your circumstance, you may need to open a new brokerage account. This is the account is where you’ll invest your money.

If you’re currently working for a company, odds are that they offer a 410K investing account. If so, here’s where you’ll invest most of your money. The only problem with this is that you’re limited to the stock options that are available.

You do have the option to open a separate IRA (individual retirement account.) Here are some of the best brokers:

  1. Vanguard
  2. TD Ameritrade
  3. Charles Schwab

5. Challenge Yourself to Invest Consistently

Committing to invest for retirement is hard, but continuing to do so is harder.

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Once you’ve started investment for your retirement, you run at risk from stopping. Often you’ll want to contribute less, so you’d have more money in your pocket.

That’s why it’s important that you create a budget that allows you to invest each month. If you’re working for a company, you can set a percentage for the amount you’d like to contribute each month. Most people by default contribute 1% but aim to contribute 10% to 15%.

Be the judge for how much you can afford to contribute after covering important expenses. To stay motivated, use Personal Capital to view your net worth.

A benefit to contributing money to your retirement account is not taxed. For example, if you earn $100 and invest 10%, you’d contribute $10, then get taxed on the remaining $90. As of 2019, the most you’re able to contribute towards your 401K is 19K but this can change.

6. Consider Where to Invest Your Money

The most common way to invest your money is in stocks, but it’s not the only way. Here are other ways to invest:

Robo Advisors

Robo-advisors[4] are fancy algorithms that’ll choose the best investments for you. Sites like Wealthfront make it easy for first-time investors to invest their money. You’d input information about yourself and set your risk tolerance.

Then, set your monthly contribution amount and your robo-advisor would do the rest. Robo-advisors charge a fee to manage your money, but less than regular advisors.

Bonds

Think of bonds as “IOUs” to whomever you buy them from.

Essentially, you’re lending money and charging interest. Like stocks, not all bonds are equal. Some will be riskier than others depending on their rating.

Here are the different types of bond categories:[5]

  1. Treasury bonds
  2. Government bonds
  3. Corporate bonds
  4. Foreign bonds
  5. Mortgage-backed bonds
  6. Municipal bonds

Mutual Funds

Picture a group of people dumping all their money in a jar that’s managed by a professional. This is how mutual funds work. The fund manager manages the money looking to earn capital gains (interest.)

One of the best types of mutual funds is index funds. Since these funds don’t try to beat the market and instead follow it, they need less research. Because of this they often charge the lowest fees and yield the best long-term results.

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Real Estate

Yes, buying a home is an investment when done correctly.

Imagine buying a home and using it as a rental property. After repairing it, you receive a monthly surplus check of $100 to $200.

This may not sound like a lot, but repeat this process enough times and you’d earn a large amount of passive income. That’s why real estate is one of the best investments to not only retire but become wealthy.

But, it requires a lot of money to start and you should expect losing money along the way as you learn the process.

Savings Accounts

Your money can still grow in a savings account. Nowadays most online banks offer a 2% annual return. Although the average inflation is higher your money will be available when you need it.

7. Master Disincline to Dodge Short Success

Investing for retirement is a long-term strategy. That’s why you need to master delayed gratification. All this means is delaying short-term pleasure for something bigger in the future. Research shows that those who have delayed gratification are more successful.[6]

So how can you master delayed gratification?

By building your discipline.

Think back to what retirement means to you. A clear purpose will help you avoid withdrawing your money during a market downturn. It’ll help you contribute more towards retirement when you’d want to waste it instead.

Your journey towards retirement will be long, so reward yourself along the way. Choose a reward that’s relevant and meaningful, so that you reinforce positive behavior. For example, after contributing more towards retirement, treat yourself to dinner.

8. Aggressively Invest on This One Investment

I’ve mentioned several types of investments but haven’t covered the most important one.

It sounds cliche but here’s why you’re your best investment towards retirement. The more you know, the more money you’ll be able to make. The more good habits you adopt, the more secure your retirement will be.

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More importantly, investing in yourself is an investment that no one can take away. There’s no market downturn nor tragic circumstance that’ll wipe your knowledge and experience.

But, how can you invest yourself?

Reading books, blogs, and anything that’ll help you learn new topics daily. Listen to podcasts and audiobooks on your commute to/from work.

Save money to buy courses and hire coaches. I used to believe hiring coaches was a waste of money when I could learn the subject alone.

But, coaches see your blind spots and hold you accountable. Hiring the right coach will help you achieve your goals faster than you would’ve alone.

Retire Happy with Excess Money

The key to a secure financial future doesn’t only belong to financial experts.

It’s possible for you and I. What if you were able to retire earlier than most people and weren’t a financial planner? What if you were able to focus on what you enjoy doing the most while your money was working hard for you?

I know this sounds impossible now, but the truth is you’re capable of taking charge of your retirement. I’m not a financial expert but I’ve learned how to invest my money by reading books and learning from others.

Investing your money is scary. So start small and invest a small amount of your money with a robo-advisor. Feel your money drop and rise for a month or two. Then, invest more and keep this up until you’re aggressively saving for retirement.

One day, you’ll wake up with a net worth you’re proud of – confident about your retirement. You now know a few strategies you can use to invest in your retirement. Will you take action to retire happy?

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Featured photo credit: Matthew Bennett via unsplash.com

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