According to a report by NerdWallet, in 2018 84% of people made financial resolutions. If you are among these planners, but haven’t quite achieved your goals, it’s not too late. And, it can even be relatively easy!
September, October, November, December… You still have four months to achieve your 2018 money related resolutions!
Here are 3 key tips for tackling the 3 most popular financial goals. It’s as easy as 1, 2, 3…
3 Easy Ways to Save More Money
Saving more money is the most common money resolution. Here are three ways to make it happen:
1. Take Advantage of Catch Up Savings
Catch up contributions are the IRS’s way of making it easier for savers age 50 and up to tuck away enough retirement savings. However, according to a Transamerica Center study, only 52% of workers know about catch up contributions.
You probably already know that there’s a limit to how much you’re allowed to save in tax-advantaged retirement account such as IRAs and 401(k)s. Well, once you reach age 50, you’re allowed to make additional “catch up” contributions over and above those annual contribution limits.
Time to learn about catch up savings and start stashing away more money.
2. Imagine Yourself in 10, 20, 30 Years
Research suggests that our brains process our future selves as strangers. And, let’s face it – you are unlikely to save for the retirement expenses of a stranger.
To increase the likelihood that you save for your retirement, they suggest that you imagine yourself in the body of one of your own grandparents or great grandparents. Think about what this old version of yourself wants to do and where you are living. Consider this person paying the bills in retirement. By visualizing yourself in retirement – and writing down these thoughts to make them more real – you are far more likely to adequately prepare for being this older person.
Here are 7 ways to imagine your future in order to achieve your personal and financial goals.
3. Find Out How Much Retirement Savings You Really Need
We all know that the better and more concrete a plan is, the better the outcomes will be.
All research indicates that having a detailed retirement plan makes you more confident and encourages better financial habits — like saving more.
The NewRetirement retirement planner makes it easy to see the impact of saving more now. The system tell you exactly how much you will need for different phases of your retirement. And, you can easily see if you’ll be more comfortable or be able to retire earlier if you save more now!
3 Easy Ways to Reduce Debt
For many Americans, carrying debt into retirement is unavoidable, but the earlier you develop a plan to deal with it, the easier it will be to tackle – and the better chance you’ll have of being able to afford the retirement you’ve always dreamed of.
Here are three strategies for reducing your debt. Choose one that will work for you. (Not sure? Try out each of these scenarios in the NewRetirement retirement planning calculator — see the short and long term impacts of each option.)
If at all possible, you may want to consolidate your debt into a lower interest rate.
Consider taking advantage of low introductory credit card balance transfers. You may be able to transfer some higher-rate balances to a new card offering zero percent interest for a year. If you do, come up with a plan to pay off the balance during the interest-free period and make sure you don’t compound your problems by running up new charges on the old account.
2. Start Small — Be the Hare
You know the story of the tortoise and the hare? The following strategy gets you out of one of your debts as quickly as possible. This is a rewarding way to reduce debt because you can see results quickly.
Start with your smallest debt and pay it off as quickly as possible, all while making the minimum payments on all the other debts. When your first debt is gone, apply that payment to the next largest debt. Follow this pattern until all debts are paid.
3. Win the Race — Be the Toirtose
Most research indicates that the fastest way to get to the finish line of paying off your debt is to start with maxing out payments against the debt with the highest interest rate. It can take longer for your cash flow to free up, but if you want to get out of debt, this is what you have got to do.
Slow and steady wins the race.
3 Easy Ways to Stick to Budget
Budgeting is not anyone’s favorite word. However, this is a proven way to get ahead and financially and it’s the key to a secure retirement.
1. Keep it Simple
The Financial Samurai is one smart guy. Do you know what is his advice? Keep it simple.
Spend less, earn more, and invest all you can. That’s it. There’s power in that message, especially considering the source.
2. Spend Less on Big Ticket Items
If you save 50% on an item, that sounds pretty impressive. But if that item was a bottle of $1 shampoo, you really only kept 50 cents in your pocket. Not such a big deal.
However, saving 50% on your home, car or food. Well, that adds up.
The average person will spend over $2,000 a month on these categories alone! If you want to stick to a budget, spend less on the big things.
Here are 8 ways to save BIG.
3. Shop Around to Reduce Insurance Costs
Auto insurance and homeowners insurance are highly competitive industries. As such you may be able shop around and find a less expensive option than your current provider.
NOTE: Perhaps the best way to get inspired to spend a little less each month is to look at what a more frugal budget will mean to your lifelong retirement finances. The NewRetirement retirement planner makes it easy to do this analysis.