How to Boost Your Savings
November 19, 2008 – 2:47 pmIf you're new here, you may want to learn what this site is about. Please subscribe to my RSS feed to get latest updates on this blog. Thanks for visiting!
Hello guys! I’ve been so busy these days plus some family issues so I wasn’t able to post some stuffs lately. For the next blog post, I’ll b e discussing about how to boost your savings so please do visit this blog regularly. I’ll be giving in tips on how to boost your savings.
Wouldn’t it feel great to kiss your biggest money worries good-bye? Imagine being able to pay off all of your credit-card debt, buy a second home, afford your kids’ college tuition bills, and know that you will be able to retire in comfort. It’s not impossible if you get into the savings habit early. By setting aside money regularly, you will be able to solve most of your financial problems –and afford the good stuff in life. What’s more, a monthly savings program will give you confidence in your ability to handle an unexpected financial emergency and help lower your stress.
Of course, it could take you a decade or longer to finance life’s biggest expenses, such as four years at a private college or your eventual retirement. But you can amass thousands of dollars –even hundreds of thousands of dollars –over time by setting aside just a few dollars a day and letting that money earn money. For example, you can build up $10,000 in cash in five years by saving and investing only $133 each month if the money earns 7% on average. That’s less than $34 a week or the cost of a nice dinner for two.
Thanks to the beauty of compound interest –when your interest earns its own interest –the earlier you start saving, the less you’ll have to set aside each month or year to reach your goals. To save $100,000 for, say, a child’s college fund 15 years from today, you’d have to save $316 a month, assuming your money earns 7% a year on average. But if you waited 10 years before starting to stash funds away, you would have to save $1,397 a month ($16,764 a year!) to meet that goal. Trouble is, you probably have a number of humongous financial headaches coming at you in the future. You may need a seven-figure nest egg to get you through retirement and a six-figure stash to afford a young child’s future tuition, to cite just two. That’s why financial advisers often say you should start saving for retirement as soon as you start working and you ought to begin putting money away for college right after your child is born. Easier said than done.
The first way to begin boosting your savings is finding more cash to save. The best way to do that is to get rid of all or most of your high-interest rate debt. The reason is simple: You will never get rich earning 3% on your savings while you are paying creditors 17%. Turn to the net worth statement you filled out in past topic “How are you doing?” Do you have any double-digit debts other than a mortgage on your home? If so, list the loans (excluding your mortgage) or credit-card balances in the worksheet at the bottom of below table and estimate the extra amount you could put toward paying off each of these debts each month. Then, try to fully pay off your loans and credit cards with the highest interest rates as quickly as you can.
In general, try to avoid using your plastic unless it’s absolutely necessary. If you carry a balance on a number of credit cards, you might consider purchasing the Debt Zapper kit from the non-profit group Bank Card Holders of America (524 Branch Drive, Salem, Va. 24153). For $15, the kit will help you figure out how much to put toward each outstanding balance each month in order to pay them all off as quickly as possible.
The next blog post will tackle about how small savings can add up.
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5 Responses to “How to Boost Your Savings”
Great tips and I agree that it is smart to save early. Being a post-grad I am trying to take 10% of of each months check and put it towards a savings emergency/vacation fund. I have another savings account and all of them are in the bank getting standard interest rates. I know the return is probably between 3-4%, minimal but safe. Do you recommend another option?
Craig
http://www.budgetpulse.com
By
Craig (Who am I?) on Nov 19, 2008
Well, I have to agree. It seems so simple to say but many people don’t get it: Get out of debt and make the money work FOR you rather than AGAINST you. Regardless of whther your savings rate beats inflation, knowing that you have money regularly put into a savings program of some sort versus paying a financial institution for the “privelege” of using their money ( aka: loans ) just makes life better.
By
Joshua (Who am I?) on Nov 28, 2008