Very few people get really excited about saving money. Sure, there are some people out there that really love it, but for the rest of us, it just isn’t all that fun. Most would rather spend our money today on things we think will make us happy instead of putting it away to fund our future goals. Why is that? Our brains are actually wired this way. We receive a rush of endorphin’s when we spend money, but don’t receive any benefit when we save money.
When people ask me for advice on how to start saving, the first step is to face the fact that we are not wired to save money. Once we accept that fact, we can begin to find ways to “trick” ourselves into saving money. Here are some tricks I have found that are very helpful to get you started saving for the future.
Make It Automatic – Don’t give yourself the option to save money, because if you have to physically move cash from your checking account to a savings account or IRA, you probably won’t actually do it. Instead, talk to your HR department about having money deducted directly from your paycheck and deposited into a savings account or Roth IRA automatically. This way, you don’t have to do anything!
Write Down Your Future Goals – The hardest thing about saving money is we forget what we are saving for. Retirement seems so far away that it is hard to find the will to save for it. Take out a sheet of paper and write down your future goals. Cut out pictures from magazines that represent your goals, and hang them where you will see them daily. It will be a constant reminder of WHY you are putting money away instead of spending it today.
Look At Your Accounts Weekly – It is really easy to fall into a habit of ignoring our financial status. It’s like we believe if we ignore it, all of our problems will disappear! We know this isn’t true, so you have to make reviewing your finances a priority. Set aside time each week to review your finances. Look at your spending, savings, and income. You will be surprised how much easier saving money becomes when you make your personal finances a priority.
Don’t Beat Yourself Up – You are going to fail from time to time when it comes to saving. You will end up spending more than you intended on a date night, or the car will break down unexpectedly. It’s okay! Life happens… Pick yourself up, dust yourself off, and get back on track. Don’t let the guilt of failing to save money stop you from meeting your goals.
Get Started Today – There is no better time to start saving than today. Don’t wait until tomorrow, or next month, or until the kids are out of college. Guess what… there is never going to be a better time to save. Call HR today to raise your 401(k) contributions, or set up automatic contributions to a Roth IRA. Don’t make excuses… just get to it!
I know saving money is hard, but it is something you need to be doing. Use these tips to help you get started today!
Do you have any tips to add to this list? Please share them!
You have been saving into your 401(k) for years, and are finally approaching retirement. What will happen to your account? What choices do you have, and what should you do? You actually have a couple of options, and several pitfalls to be aware of. Some of these pitfalls could cost you big time, so be sure to stay on top of them!
1. Rollover to an IRA
After you have officially separated from your employer, you can rollover your 401(k) to an IRA. Rollover just means that the money goes from one account to another without being taxed. If you have contributed to a Roth 401(k), the money can be rolled to a Roth IRA. Employer contributions and Traditional 401(k) contributions can be rolled to a Traditional IRA.
2. Leave your 401(k) alone
Many 401(k) plans allow you to leave your 401(k) with your old employer. This is the simplest option, because you don’t have to do anything. Evaluate the investment choices and fees within your 401(k) compared to rolling it over to an IRA. Usually it makes sense to do a rollover, but leaving it alone is certainly an option. Read more..