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The Ultimate Guide to Make Saving Money Fast and Easy

The Ultimate Guide to Make Saving Money Fast and Easy

We all know we should be saving money. The problem is that it usually isn’t that we don’t make enough money, it’s that we don’t have a system to manage our money.

With the right system in place, saving money is simple and you’ll be surprised just how fast your savings can grow.

In this ultimate guide to make saving money fast and easy, we’re going to look at simple ways to get started, what common mistakes to avoid AND some advanced steps that anyone can master to take their spending and saving habits to the next level!

The sad truth about saving money

Most people have a savings account. A few of them even have something in it. Unfortunately if you’re like the majority of Americans, you have less than $1,000 saved. According to a recent survey by GoBanking, upwards of 57% of Americans had less than $1,000 in their savings account.[1]

The good news is that percentage was down from 69% the year before. But it still illustrates that we have some work to do with saving money.

Thankfully, if you haven’t started saving money yet, our ultimate guide to saving money will get you on the right track.

If you’re already saving, then the guide will help you to take your finances to the next level.

Common mistakes people make when trying to save money

The most common mistakes people make when trying to save money are:

  • Not getting started
  • Not saving enough each month
  • Not taking advantage of employer matches on retirement savings
  • Living above their means (and thus limiting the potential for saving money)

Often when getting started, many people freeze in the face of terms like 401k, IRA, Roth, mutual funds, etc. That fear and lack of knowledge can cause what many refer to as analysis paralysis.

I would rather you get started and make some mistakes than not get started at all or wait 10 years to do it.

With the age of the internet, finding information and educating yourself has never been easier. Between YouTube and podcasts, you can learn how to do almost anything quickly and easily.

So take a deep breath, do some research but ultimately get started sooner rather than later.

Simple ways to start saving money (For beginners)

For retirement savings, most experts agree that about 15% of your gross annual income is about right.

If you waited until 45 to start, you may want to up that. Starting at 23? That’s awesome! You can get away with less if you need to.

Not sure where to start at all? Start with your employer and see if they offer a 401(K) retirement plan. Many do and often they will match a certain number of dollars that you put in. So make sure you put in at least what they will match.

If they don’t offer a retirement plan, then you’ll want to open a Roth IRA. You can do that quickly and easily online at places like Fidelity or E-Trade.

A Roth IRA is simply an investment account where you put money in (most often investing in mutual funds which are simply groups of company stocks). You put money in each month and the investment grows over time.

Ready to dive in deeper? Learn more about what’s different between a 401(k) and an IRA.

The key differences between a Roth and a regular IRA

In a word, taxes are the difference.

With a Roth, you add money to it that you have already paid taxes on (ie: it comes after you deposit your paycheck which typically has tax deducted already).

After you add the money, it grows tax-free and you withdraw some or all of it after you reach age 59 1/2. As long as you wait until retirement age to withdraw it, the money you take out is tax-free. This is a great option since it could grow considerably!

With a regular IRA, you add money before you pay taxes (often through a payroll deduction).

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Then when you withdraw the money, you pay tax at that time. The primary benefit here is you can reduce your taxable income now and you might be in a lower tax bracket by the time you take your withdrawal.

There’s a lot more to say on retirement savings, so dive in deeper, check out How To Catch Up On Your Retirement Savings.

The limitations of the IRA

There are a few limitations to IRAs you should be aware of.

For starters, you can’t open a Roth if you make over $135,000/year for a single person or $199,000 for a married couple filing jointly. You can, however, open a regular IRA if your income exceeds those limits.

Either way you can only contribute a maximum of $5,500/year to either type. If you’re over 50, however, you can contribute up to $6,500/year. Married couples can each have an account with those limits for each one.

In many cases, to get to 15% of your income going into retirement, you may need multiple accounts (401k, Roth and regular IRA).

Of course, always check with the IRS as those figures can change from year to year.

How to select the right mutual funds

In a company 401(k), the company managing the fund (often someone like Vanguard) will give you a list of mutual funds to choose from. You determine which ones to put a certain percentage of your contribution in each month.

In an IRA, you have the ability to select any mutual fund to invest in.

There is a lot to know about saving money inside of mutual funds. To start with, simply look for funds with a 10 or more year track record where they have earned an average of 10% interest (or higher) over that period.

The stock market fluctuates a lot. If you see a company has averaged over 10% for a decade or more, while nothing is guaranteed, that’s a great predictor of how the fund will continue to perform.

As you gain experience, you can also start to consider things like expenses (different funds charge different fees) and whether you get charged the fees when you buy or when you sell. You can buy and sell funds within your IRA at any time.

Investment diversification and why it matters

Diversification is key.

One of the most common mistakes is just investing in 1 stock or mutual fund. If that one investment goes south, you don’t want all of your retirement savings to go with it. So don’t put all your eggs in one basket.

Have your IRA or 401k invested in at least 4 different mutual funds. That way if one stops performing well, you still have the other 3.

Also, while you don’t want to knee-jerk react every time Wall Street takes a plunge, you do want to monitor your funds at least quarterly and make timely and thought out changes as needed.

Want to learn more? Check out these 6 Tips for Long-term Investment Success.

The importance of an emergency fund

Let’s face it. Life happens!

We’ve all been there. Your air conditioner breaks, your car gets hit by and uninsured driver or perhaps a medical expense out of pocket bill is over $1,000.

Without an emergency fund, almost everyone would panic and just reach for a credit card. But if we’re trying to improve saving money and plan for our financial future, adding extra debt is not how we want to go about doing that.

Thus an emergency fund (or lack thereof) can literally make or break your household budget. This is a simple savings account in your bank. It’s not an investment and you need to have easy access when you need it. It should be separated from your regular savings account and only used for true emergencies.

Ideally, you should have not 1 or 2, but 5 bank accounts.[2] Having a separate account for each purpose will help keep you on track with saving money in each individual category.

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How much should you put in an emergency fund?

If you don’t have an emergency fund, start one today. Make your initial goal to be $1,000. As you get out of debt and get your financial ducks in a row, build that up to 3-6 months of your monthly expenses.

Note I said expenses and not income. I would also suggest that in a real financial emergency (job loss for example), radically cut expenses down to the essentials.

Why the 3-6 month range? In a word, it depends on job security. In a stable 2 income household where both bread-winners have been employed for 2 or more years, 3 months is fine. If you have 1 income or unstable or inconsistent income, go towards 6 months.

For most 2 person households with 2 or more kids, we’re talking a minimum of $8-10,000. Depending on your income and expenses though, it could be twice that.

Can’t quite figure out how to even save $1,000? Check out these Eight Simple Ways to Save for an Emergency.

Crucial steps to take for holiday spending

Almost everyone spends some kind of money around the November and December holiday season. Even if you don’t celebrate Christmas, chances are you buy gifts for your boss or do a gift exchange at work or host holiday parties.

Most folks fail to plan throughout the year for this spending. Then they hit November 1st, panic and reach for the credit cards. Thus it’s crucial, if we’re talking about saving money, that we have a plan for holiday spending.

The key to holiday spending success

The key to holiday spending success is to start saving money for the holidays in January. But even if you didn’t start in January, get started now.

Decide (in conjunction with your spouse or partner if you have one) how much you plan to spend. Make sure to include holiday travel and food expenses.

Then assume you’ll want to start spending that beginning in November. Divide that total by the number of months you have to save (11 if you’re starting in January). Transfer that amount of money into a separate savings account each month.

Many banks and credit unions have what’s called a “Christmas Club”. This is a savings account for holiday spending and they typically transfer it back into your checking account November 1st.

As an example, say your family of 4 plans to spend $1,000, divide $1,000 by 11 and we see that you need to transfer $90.90 into your holiday savings account each month starting in January.

How to plan for a better financial future

So we now have some of the basics of saving money in place. That means it’s time to look at our spending and expenses and make sure we’re living within our means.

After all, if expenses are out of line, saving money (at least enough of it), can be very hard, if not impossible.

How much should your mortgage or rent be?

Many experts agree that you should not be paying more than about 25% of your monthly take home pay on your mortgage or rent payment. When we’re talking mortgage, make sure to include taxes and insurance which are sometimes (but not always) included in your total monthly payment.

According to the Bureau of Labor Statistics, the average annual salary in 2017 was around $44,000.[3] Let’s assume that for a 2 person household, both people make about that. Thus for a combined annual salary of $88,000, we’re talking about $5,500 per month take home pay in a 25% tax bracket.

This couple should then not spend more than $1,375/month on rent or mortgage.

What if your rent or mortgage exceeds 25% of your income?

If you find yourself exceeding 25% for your rent or mortgage, it’s time for some tough questions. Ask yourself:

  • Is your income likely to increase in the next year?
  • If so, how does that impact the percentage of your housing expense?
  • If you own your home, do you love it?
  • If yes, can you add a side hustle or find other ways to boost your income?

If you are just a little over 25% and you love where you live, I would probably just stay there. Assuming you have a fixed rate mortgage, your income will likely increase faster than property tax and insurance.

If you don’t love your home or your payment greatly exceeds 25%, then it’s time to consider moving down in home. If you don’t, saving money and getting ahead financially can be very difficult.

The proven power of doing a monthly budget

Show me someone financially successful and unless it was all inherited, chances are this person does a monthly budget each and every month.

Many people are unintentional with their money and their spending. They buy what they want in the moment, often on a credit or debit card and then just pay the minimum monthly payments at the end of the month and keep going.

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We’ve all been there, but there’s a better way.

While you can use paper or a spreadsheet, you might also want to check out the Best 15 Money Management Apps available so make budgeting and saving money even easier.

How to start your budget

To get started budgeting, sit down with your spouse or partner before the month begins. List your known income for the month at the top and then subtract all the known expenses you have for the month.

Ideally when you get to the bottom, it will be close to zero. That doesn’t mean you are broke. It means you were intentional with your money and had a solid plan for where every dollar went.

It’s totally okay if one of you (for those in a 2 person household) is more the budget nerd. What IS crucial is that you both agree on how your money gets spent.

For both financial success and relationship success, this is what most experts recommend:

  • Married couples (or long-term committed couples) should combine bank accounts
  • Combine all expenses and income (it’s no longer yours or mine but ours)
  • Make all financial decisions together
  • Have an agreement about how much 1 person can spend without consulting the other

When we are in sync with our spouse and have a solid plan and system, you’ll not only find great success in saving money but greater success in your relationship too.

Still not sure how to get started? Learn more about the budgeting here.

How to crush the debts

The average household in the US owes almost $16,000 on credit cards according to a recent study by NerdWallet.[4]
Add to that, an average of almost $30,000 in car loans and almost $50,000 in student loans and you can see why many people are in a debt crisis. Notice I didn’t even include mortgage debt in those figures.

If you find your household is among those with upwards of $100,000 in combined debts, not counting the mortgage, you owe it to yourself and your financial future to make a change.

Getting out of debt doesn’t require winning the lottery nor does it require an inheritance from that rich uncle. It just takes you and your spouse or partner being intentional with your decisions and your money.

Most of us weren’t taught good financial practices in school or growing up. But now is the time to learn those practices and put them in place until they stick.

10 years ago, my wife and I were $60,000 in debt. We drove cars that weren’t paid for and our house payment was well over 40% of our take home pay. We had to learn the importance of saving money and getting out of debt the hard way.

If you follow these proven steps in our ultimate guide to make saving money fast and easy, you’ll be far better off than I was.

How we find ourselves in debt

Most of us with debt didn’t get there overnight. Thus we won’t get out of debt overnight either.

The good news is that with a small emergency fund, a reasonable house payment, budgeting and planning for things like holiday expenses we should be well on our way to financial success.

Many of us got into debt by making decisions emotionally. We bought that new car or giant TV because we saw the neighbors with one or felt we deserved it after some drama or turmoil in our life. When we buy things like that incurring debt, the expense doesn’t seem real to us.

That’s especially true when we buy things using deals like “3 years no interest or payments”. This is because cash didn’t actually leave our wallet or bank account (yet).

If we can get to a place where we no longer use debt, the expenses and spending, choices become a lot more real. When that happens, we evaluate and scrutinize purchases much more closely. By doing so, we naturally spend less and saving money gets easier.

The best way to get out of debt (Quickly and easily)

Since getting into debt was emotional, we have to use emotions to our benefit to get out of debt.

By that I mean ignore things like interest rates and balance transfers. Those things are great in theory but we need to feel an emotional win to keep our motivation up.

The easiest way to do that is to do what financial guru Dave Ramsey calls a “debt snowball“.

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With that system, we put all our debts (excluding mortgage) in order from smallest to largest. Pay minimum payments on all but the smallest and pay every extra dollar you can towards that smallest one. When the smallest gets paid off, attack the next one on the list in the same way.

By working our way up from smallest to largest and (hopefully) paying off those small ones quickly, we get traction early on. That helps keep us motivated to get to the finish line.

Things like the “stack method” of paying off debt sounds great but only really works if you are super disciplined and committed. If your resolve is rock solid, go for it!

Advanced steps to make money saving a life-long habit

Once you’re out of debt, budgeting, saving 15% for retirement and have solid plans for saving money for things like emergencies, holidays and your next car, it’s take your finances to the next level.

Congratulations! You are winning with money.

Now you’ll want to look at things like:

  1. Paying off your mortgage early
  2. Increasing charitable donations
  3. Adding even more to retirement funds

Why paying off your mortgage early is a great idea

Most of us have 30 year mortgages. The trouble is, not only do most of us move before we live in a house 30 years, we have a tendency to take out home equity loans and lines of credit.

Thus, even if we use those loans for things that bring value (like remodeling your house), it’s still just another debt.

Imagine what life would be like without a house payment!

While we still have to pay property tax and homeowner’s insurance, most of us can easily cut our monthly expenses by hundreds, if not $1,000 or more once we pay off our mortgage.

Think of what you do with an extra $1,000 each and every month. Spend more, give more or invest more (or ideally a combination of all 3).

How to pay off your mortgage early

The average American owes just over $200,000 on their mortgage according to a recent survey by Experian.[5]

Let’s say you still owe that amount and have 20 years left on your 30 year mortgage at 4% interest. Not counting taxes and insurance, you’ll end up paying almost $300,000 if you just make the minimum payment for 20 years.

Imagine what you could do with that extra $100,000!

Let’s say instead of making your normal payment of $1212, you up it each month to $1,500. In that scenario, you’ll knock 5 years off your loan and save almost $26,000 in interest! All that with just an extra $288/month payment. Imagine the savings if you went even higher!

Can’t scrape an extra $288 together? No problem! Any extra amount helps. As you get debt under control or your salary increases, you will be able to increase over time.

Do your own calculations using the Extra Payment Mortgage Calculator.

Well on your way to saving money!

Hopefully this ultimate guide to making saving money fast and easy gave you everything you need to know about how to get started or how to ramp up your savings.

We looked at some simple actionable tips and we broke down the areas where most people get stuck.

Most importantly, you now have a clear path of both where you are now and how to get to where you want to be.

Featured photo credit: Pexels.com via pexels.com

Reference

More by this author

Jeff Campbell

A husband and father trying to help other dads and moms navigate through the worlds of mindfulness, health, parenting, marriage/relationships& more.

15 Flavorful and Healthy Family Meals That are Perfect for Picky Eaters 34 Kids Yoga Exercises That Boost Self Esteem (And Physical Flexibility) The Best 10 Types of Exercise for Kids Who Get Too Much Screentime Ultimate Guide to Saving Money Fast and Easy - plant your money and watch it grow The Ultimate Guide to Make Saving Money Fast and Easy How Mindful Meditation Can Improve Your Parenting Style

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Last Updated on April 28, 2020

9 Millionaire Success Habits That Will Inspire Your Life

9 Millionaire Success Habits That Will Inspire Your Life

As technology evolves and information becomes more accessible, it has also become more challenging to define success. A lot of people are trapped in the rat race while trying to discover the actual formula for success.

You could become overwhelmed with what tools, techniques or philosophies to imbibe while trying to get tips over the internet. At every click and turn, there are ‘how-tos and quick-fix’ on how to become successful overnight. You will find several courses, articles, videos and books on how to achieve financial success.

But what if I tell you it doesn’t have to be complicated as people made it out to be? What if you could achieve success by merely following these 9 millionaire success habits?

1. Read for Personal Development

A daily habit I have discovered millionaires share in common is reading. For instance, if you are an entrepreneur, you need to read to become an efficient leader and a productive business owner. Reading helps you to grow and learn without going to a business school.

A research conducted by Thomas Crowley indicates about 85% of self-made millionaires read at least two or more books each month. [1] Warren Buffett is one of these examples. He spends 80% of his day reading. In the early days of his investment career, he would read 600 to 1000 pages in a single day.

While millionaires sometimes read for pleasure, they also learn to improve themselves. They read topics on leadership, how-tos, self-help, biographies, lifehacks and also follow current events.

Here’re some recommendations for you: 25 Best Self Improvement Books to Read No Matter How Old You Are

2. Establish Multiple Sources of Income

Another success habit I noticed about successful people is that they don’t depend on a single income source. Every millionaire possesses multiple sources of income. This helps them to manage economic challenges and also make more money.

They are passive income addicts. They earn interests from loans, rental income from real estate, royalties from intellectual properties, dividends from investments. They also launch a side business or run a website or sell information products.

How income is made either passively or actively is what separates the successful from the wannabes. They are always learning ways to build multiple streams of income.

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3. Live on a Stipulated Monthly Budget

An average millionaire does not believe in luck and jackpot. They take the time to understand cash flow-income and expenses. Based on this, they establish a monthly budget and religiously stick to it.

The essence of the budget is to minimize unnecessary expenses. This will help you gain complete control of your financial life. Budgeting helps you to avoid overspending to achieve your financial goals. Here’re some tips to help you stuck to your budget: 32 Hacks for Sticking to Your Budget

4. Manage and Maximize Money

The most significant education for a millionaire is financial intelligence. Nobody attains financial freedom without gaining financial intelligence. This is the more reason millionaire, regardless of their income, keep their knowledge about tax strategies updated.

They always seek to reduce their tax bills. One approach they employ is by living or incorporating their business in states with no income tax.

Do you know that about 60 companies paid $0 legally in the 2018 tax year? Some of these companies that ‘avoided'(note: not evaded) federal income tax include Chevron, Amazon, Halliburton, General Motors, Delta. Their US income was totaled at $79 billion with an effective tax rate of -5%.

What’s the deal? They got a tax refund.

How do they accomplish these?

An ITEP report indicated that they have the culture of throwing huge sums at tax experts who assist them in discovering creative, as well as convoluted means of paying little tax as much as possible.[2]

5. Avoid Debt

Another habit that separates the millionaires from the rest of the world is how they manage debt.

They don’t live an extravagant lifestyle; instead, they only buy what they need and can pay for. They do not book hotels and flights by using their credit cards to pay for them.

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They are conscious of the interest rates even when they use credits cards or take loans. If possible, they try to pay with cash because of its zero percent interest rate.

6. Set Daily Goals

It does not matter if they are setting up a business, a career, or financial projections; they have the success habit of setting short term goals. They plan daily and weekly goals to generate momentum in achieving their long-term goals.

Ensure you prioritize when setting daily goals. This will help you to achieve the most important to-dos on your list.

Setting priorities will help you to focus on highly rewarding activities. If you desire financial freedom, it is wise to pursue activities that earn you thousands of dollars rather than hundreds of dollars.

7. Don’t Act Rich

The goal is not to act rich but to be productive. Interestingly, Thomas Stanley buttressed in his book that for the most prestige brands of cars, about 86% percent are toys of the non-millionaires. While most believe that people with huge fortunes tend to drive exotic cars, in reality the largest consumers of pricey cars are aspiring millionaires.[3]

According to findings by Experian Automotive Researchers, 61% of individuals who earn $250,000 or more rarely buy luxury brands. Instead, they buy Hondas, Toyotas, and Fords like the rest of the world. The reason is they are not ready to spend money on premium cars that tend to drop in value in a couple of years as it would cost money. Millionaires invest in assets that appreciate.[4]

8. Own or Buy Businesses

In Robert Kiyosaki’s cashflow quadrant, he divided how you earn income into four quadrants. The E and the S quadrants take the left position while the B and the I are on the right side. According to Robert, it is possible to be on all quadrants, but the millionaires are not.[5]

  • E stands for employee – they work for others
  • S stands for self-employed – they work for themselves
  • B stands for a Business owner- employees work for them (500 or more employees)
  • I stand for Investors – Money work for them like Warren Buffet.

Your goal is to move from the left quadrant to the right quadrants where you own big businesses or make money work for you.

It is possible to become financially successful by pursuing what you love. For instance, if you love writing, aspire to be the best seller. Wealth and passion work together.

Check out How to Start a Small Business with Little to No Money for tips.

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9. Avoid Get-Rich-Quick Scheme

A millionaire holds patience as an essential virtue. It takes patience to become successful, not only in finance but in every aspect of life. While it is possible to become financially successful at an early age, most millionaires hit it at age 50. They live a moderate life, invest in their future and retire rich.

Bonus: How to Develop the Millionaire Success Habits?

Having learned these habits, the next question is,

How can I develop the Millionaire Success habits?

Here are six values you will need to develop:

Establish Your Life Vision

You need to be clear about what you want in life to set yourself for a life of success. Your vision has to go beyond becoming a millionaire to understanding why you want to become one. Any great entrepreneur you will ever find has a clear vision and an established mission.

Understanding why you are doing what you do will drive you to become the kind of successful person you want to be.

Make Your Passion a Profession

When your passion becomes your profession, work becomes pleasurable. Loving what you do enables money to flow to you and through you.

So what’s going to be? Wake up every morning by speaking positive words into your work, love what you do, and focus on the work that brings you joy.

Take a look at this article and learn how to make it happen: 5 Steps To Turn Your Passion Into A Career

Focus on Solution

Focusing on the solution means establishing the problem that you or your business address. This will help you focus on the solutions when others are faced with challenges.

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A millionaire has a mindset that is fixed on the solution. He or she knows there’s a way out, and that every problem is an opportunity in disguise.

Improve your problem solving skills with these tips: 6 Effective Ways to Enhance Your Problem Solving Skills

Develop Your Leadership Skills

Leadership skills are an asset that is indispensable if you want to develop a millionaire success habit. The more you hone your leadership skills, the more you will attract leaders who share your values.

Be Growth-Focused

Millionaire entrepreneurs prioritize self-improvement. Here’s how to achieve it:

  • Get a coach. Coaching will impact your life, and you will achieve peak performance in life and business when you have a life coach.
  • Be coachable. It is not enough to have a coach; you must be coachable. Sometimes, you need feedback and counsel to reposition your life and business. A coach has the wisdom and experience to counsel you from a higher perspective. The more you receive feedback and work on yourself, the more you become better at what you do and who you are.

Flip Your Thought Pattern From Acting To Being

It is not enough to have a millionaire success habit, you must also become a person of positive influence. This is how you can become significant. Bill Gates is not only rich; he is changing lives in Africa and different parts of the world.

If you want to become successful, you must first be and think like a successful person. This is how resources you need can flow into your life.

Here’s a final thought from me:

It is not enough to do something to have something; success is about being someone who possesses what is needed to take positive and inspired actions.

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Featured photo credit: Austin Distel via unsplash.com

Reference

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