As you look at the list below of ten ways to save money you may think something like "Huh? How can making a net worth statement help me save more?" Believe it or not, it can! Be open-minded. Give all ten ways to save money a try over the next year and see what happens.
1. Make a net worth statement. Update it once a quarter.
A net worth statement is a list of all everything you have that has a respectable value; items such as savings and investments, real estate, vehicles or collectibles. Your net worth statement also lists all your debts. The difference between what you have and your debt is what you are worth. Tracking this number is a powerful incentive. The simple act of updating it once a quarter will inspire you to save more and pay down debt.
- Learn more: How to Calculate Your Net Worth
2. Ask for a raise.
People really do tend to get what they ask for, and asking for a raise can be one of the fastest ways you can save more money. Just be sure that you allocate some of your increased salary to savings. For example, if you get a 4% raise, increase your 401k contributions by 2%, or if you don’t have a 401k then set up or increase your automatic contribution to a savings account or IRA.
- Learn more: How to Ask for a Raise
3. Run a tax projection each year.
Too many people pay too much in taxes. In order to find ways to pay less, you have to look at your numbers before the end of the year. That gives you time to make changes like contributing more to a 401k or IRA, converting assets to a ROTH IRA, making an extra charitable contribution, or moving forward with a medical expense before year end so it will be deductible. If you wait until after the year is over it is too late. Tax planning is best done in early fall (September or October) to give you time to adjust items if necessary.
- Learn more: 3 Ways to Do Your Tax Planning
4. Draw a retirement income timeline.
You need to see where your income is going to come from year by year. A timeline is a good place to start. You can do this on a piece of ledger paper, with an excel spreadsheet, or with the help of a financial advisor. The important thing is to do it.
- Learn more: How to Create a Retirement Income Timeline
5. Reduce investment fees.
Many investors pay too much in investment fees. If you could cut the fees you pay by half a percent, on $100,000 over ten years that equals $5,000 of savings. Take the time to learn what you pay. Then find ways you can get the same quality at a lower price.
- Learn more: 6 Investment Fees to Know About
6. Review your spending. Find 5 ways to save.
In order to come up with five ways you can spend $100 less a month you have to start by reviewing what you spend now. If you are married, do this exercise with your spouse. Think about it: if you can come up with fives ways to save $100 a month, even if you only choose to move forward with two of them, that equals an extra $2,400 a year you can save.
- Learn more: How to Make a Budget
7. Explore ways to earn extra income.
The best way to save more is to spend less. The second best way is to earn more. Finding a way to turn a hobby or skill into extra income can be fun, rewarding and provide additional security.
- Learn more: Earning Extra Money Can Be Easier Than You Think
8. Learn how your Social Security benefits work.
Many couples will receive over $1 million in Social Security income over their joint lives. This is a big number! And yet they spend no time learning how their Social Security benefits work. You can make decisions that will help you get more out of your Social Security benefits. Start by learning the basics.
9. Set a goal to accumulate cash savings.
There is nothing that will make you feel more secure than having cash in the bank. Saving money in retirement plans is great; just make sure you put some money aside in savings, money market or CDs too. The best way to do this is to set a goal and patiently begin setting aside money in a separate account until you meet the goal.
- Learn more: The Power of Cash Reserves
10. Spend an hour playing around with an online retirement calculator.
Even if you never plan on a traditional retirement, playing around with an online retirement income calculator will help you understand what your money can do for you someday. It is helpful to know how your savings can be turned into future income.
- Learn more: Web’s Best Online Retirement Calculators
