Saving money is one of the most popular New Year's Resolutions. If it's yours, you're not alone. But how do you go about it? Are there ways you can save and set yourself up for a comfortable financial future? There are...and I'm going to share them with you.
1. Trim Household Expenses
If you're not getting a raise or taking on a second job, there's only one way to save money: trimming your regular expenses to create a surplus. Most families can trim up to $2,000 from their yearly budget just by paying more attention to these common household items:
- Cable TV. In 2018, the average pay-TV customer spent $106.20 per month, up 44% from 2011, according to Bloomberg. That's as much as a small car payment! Cancel your cable and stream your favorite shows through Netflix, Hulu, or Amazon Prime. These services cost around $10/month. That's a huge per-year savings.
- Gym membership. It's easy to pay as much as $80/month for a family membership to a gym. Instead, run or bike in your neighborhood, do yoga or Pilates DVDs at home, and lift free weights in front of the TV during commercial breaks.
- Subscription services. From magazines to web apps to mobile apps, how much is your family spending without knowing it? Create a list of services and apps that charge you via auto-renewal. Cancel the ones you haven't used in two months.
- Phone service. Do you still pay $20 - $30/month for a landline? Consider cutting the cord and going mobile-only. If that scares you, there are new services that offer national local and long-distance calling for less than $10/month, including MagicJack and Vonage.
2. Transfer Money to Savings Every Month
Set up automatic transfers through online banking to pull money from your checking to your savings on a regular basis. You can set up one transfer per month, or one per paycheck. It's a foolproof way to save that doesn't depend on your memory. Bonus: Seeing the savings add up month by month is a big encouragement to continue saving!
3. Protect Your Family
Your family depends on your paycheck. But what happens to them if something happens to you? Can they pay the mortgage and other bills without you? If not, put some of your savings to good use and protect them with life insurance. When you insure yourself, you're giving them a financially secure future. Plus, since you're doing so well at saving, the payments won't put a dent in your budget. If you save more than the policy costs, it's like being able to protect your family for free!
4. Invest in an Annuity
To take your saving to the next level, consider purchasing an annuity. Chances are, your money isn't earning very much interest sitting in your savings account. There's also a good chance you're worried about how to pay for retirement. An annuity fixes both of those problems.
When you buy an annuity, you pay into it over time or with one lump sum (using a pension or 401k payout, usually). That money earns interest over time. Then, when you retire, that money starts coming back to you in monthly checks for the rest of your life. The interest rate is higher than what savings accounts offer, which is how the annuity pays you for life.