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Pay yourself first. That means take money from every paycheck and put it into savings, the same way you put money toward rent or a mortgage. Experts recommend setting up an automatic transfer from your paycheck to your savings account as a way to do this.
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Make other types of savings automatic. If your employer offers a retirement plan, pay the maximum amount into it, if possible. Have it deducted automatically from your paycheck.
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Look for a match. Your employer may have a savings program, such as a 401k, to which the company will contribute if you do. Even a small amount from your employer adds up in retirement savings over the long run.
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Every bit you can save counts. Even if all you can manage is a few dollars here and there, it’s a good start.
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Pay in cash when you can. It’s easier to overspend when you use a credit card.
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Keep track of all your expenses. If you aren’t sure where your money goes, keep a careful record for a month. You may be surprised where you are spending money instead of saving. Cut back on extras and put the savings into an account. Some ideas for saving include:
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Make coffee at home instead of stopping for a daily coffee.
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Pack your own lunch and drinks for work.
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Cut down on eating out.
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Find low-cost ways to host social events at home.
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Shop for kids’ clothing at secondhand stores. You can save a lot more if you buy a pair of kids’ jeans for $3 instead of $30 or $40.
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Check out secondhand stores for yourself as well. Many have designer clothes that are in excellent condition.
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Take a second job. If your budget is tight, it might be worth taking a part-time weekend job for a while just to boost your savings.
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Look for interest. Stashing cash money in a jar may keep it safe, but it also means that your money is not working for you. Find a savings account, CD, or another plan that will earn interest over time.
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Do your research. Remember that investments called “high risk” can bring in a lot of money, but that your money can also disappear. Don’t invest any money in high-risk investments unless you can afford to lose it.
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Start young. Begin saving with your first job if you can. Increase your savings as you earn more. Even if you save $2,000 a year from ages 19 to 26 and then stop saving, with a 10% return on your invested savings along with compounding interest, by the time you are 65 you will have $1,019,148.
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Don’t withdraw from savings. If you can manage it, leave saved money in an interest-bearing account. Retirement and college savings programs may charge you a lot of money to withdraw savings early. Make sure you understand how those penalties add up.
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Downsize. Think about whether you need as much house as you have. Moving to a smaller home could cut costs and give you more savings. Aim at spending less than one-third of your income on housing.
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Take in a roommate. This can potentially add thousands of dollars to your yearly savings’ account. Interview applicants’ employers and past landlords, and get their written permission to do a background check on them, including a credit and criminal history report. Only after they prove to be reliable should you sign a lease with a tenant.
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Prevent debt. Keep your total debts down to less than 10% of your assets. Money you spend to pay down debt is money that can’t go toward savings.
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Put most of your bonuses or raises toward savings. Don’t add more expenses. If you make more money than expected, put it into savings rather than spending it.