Only about one in 10 Americans with retirement accounts max those accounts out, according to data from Vanguard — in spite of the fact that doing so is one of the surest ways to get to retire earlyish, financial advisors say.
Of course, many can’t afford to max their retirement accounts: The median household income in America is less than $60,000 — and as $18,500 is the max for your 401(k) if you’re under 50, that would eat up a large portion of many people’s incomes.
But even those who can afford to don’t. “There are a lot of people who let their spending dictate their savings,” explains Rich Ramassini, a certified financial planner and the director of strategy and sales performance at PNC Investments. In other words: They prioritize spending over saving money — which often means they don’t save much.
Indeed, a study of nearly 30,000 Americans released Thursday by Principal Financial Group shows that people who max, or close to max, their 401(k) savings often forgo spending on things that most of us don’t. “The overwhelming majority (70 percent) are making maximum contributions without having a formal budget in place, instead favoring large-scale sacrifices to max out their retirement contributions,” the report revealed. This includes limiting travel (about four in 10 say they do this to save more) and owning a modest home (about one in three).
But it’s not all about punishing sacrifice. In fact, “you don’t have to be miserable to be a super saver,” says Jerry Patterson, senior vice president of retirement and income solutions with Principal Financial Group — who reveals that big savers often do “common sense and practical” things to save as much as they do. So Moneyish asked people who are maxing their 401(k)s and financial experts how to save way more. Here are five simple ways.
Make saving a priority Even if you don’t contribute to your 401(k) now, experts say you should likely start — at least putting in up to what your employer matches. Open enrollment typically takes place in the fall, so call HR and get the details of your plan and when you can sign up if you haven’t already.
This may take a rethinking of how you think about retirement savings: Jennifer Beeston, the vice president of mortgage lending at Guaranteed Rate who maxes out her 401(k) each year, thinks of savings as a necessity, not a luxury. “My 401k deposits are non-negotiable to me. It’s like a mortgage or electricity. It is a need not a want,” she tells Moneyish. To help her focus on putting savings first, she tells herself that “retiring is inevitable and I want to have quality of life when I retire.”
Saramaya Penacho, 30, a San Diego-based publicist and her husband Zach, think of it similarly: “We look at our 401(k) and IRA contributions as a fixed expense. After the basic necessities (food, housing), we first contribute to the retirement accounts – before considering anything else,” Penacho tells Moneyish.
Choose older and modest You don’t have to go without the things you want — but you can make better choices about them. Principal’s research shows that one of the top 3 sacrifices big-time savers make is to drive an older car, followed closely by living in a modest home. David Rae, who works as a financial planner at DRM Wealth Management, says that’s helped him save big: “I am driving a 2013 Lexus ES300 Hybrid. The car is paid off which allows me to put away about $600 more per month. I know plenty of people spending $1600 per month on their car payments, which I think is just crazy,” he explains.
This kind of thinking was widespread among other savers Moneyish talked to. Penacho says she and her husband prioritize saving for retirement over “new cars…or the latest iPhone.” And Rania Eldekki, who is the director of digital marketing at marketing agency Hudson and has been maxing out her 401(k) since last year, notes that “I drive an economical car, a Honda Civic” and “split rent with a roommate — and not on the fancy side of town.”
Slowly increase the amount you contribute When you’re first starting out in your career, it can be hard to max your 401(k) and that’s OK: Ramassini says you can start slowly — try to at least contribute up to what your employer matches if you can — and amp up savings each year, even if it’s just by 1 percent. That’s the approach that Eldekki takes. For the past five years she’s upped her contributes by about 2.5 percent annually, until she hit the max last year. And she says she plans to continue to max it out: “I get less now with the goal of having more in the future,” she explains.
Don’t look at saving as a sacrifice Instead, it will be easier to save if you think of it in terms of what you gain by doing it, be that a cushy life at the beach upon retirement or the ability to switch to a beloved, but low-paying career. Indeed, two thirds of big-time savers say their motivation for saving is to think about having a good lifestyle in retirement, according to Principal’s research. “I love what I do and may work into my 70s, but I get a ton of joy knowing that I am on track to have financial freedom at around the age of 50. That means work is an option and I can spend tons more money on things I enjoy like travel or wine with friends,” Rae says.
Make increases automatic — and add any bonuses to the pot “Set your contribution to automatically increase each year,” says Alexander S. Lowry, a professor of finance at Gordon University. That way, you’re automatically saving more every year, even if it’s just a modest 1 percent increase. “And if you receive a bonus you can contribute from that – since it’s a bonus you weren’t banking on it so you can afford to contribute from it,” he adds.
12 Ways to Save Money and Add $5K to Your Bank Account This Year
How much money would you like to have saved for the holidays? Or your next vacation? Or your emergency fund?
Whatever your goal, the number probably seems overwhelming.
Trying to figure out where several hundred or a few thousand dollars might come from is tough. Instead, break it down. Find ways to set aside just a little bit at a time — you’ll be surprised how quickly you can move toward your goal!
Here Are 12 Ways to Save Money This Year
To help you get started with that first step, we've put together a 12-month strategy on how to save money and work your way up to $5,000 in savings this year!
Month 1: Start Investing Without Thinking About It
If you’re like most of us and wish your money would just take care of itself, consider starting an investment account through Acorns.
You can start small — with $5 — and stack up change over time with its “round-up” feature. That means if you spend $10.23 at the grocery store, 77 cents gets dropped into your Acorns account.
Then, the app does the whole investing thing for you.
The idea is you won’t miss the digital pocket change, and the automatic savings stack up faster than you’d think. And the sooner you start, the more you could potentially make. For example, Penny Hoarder Dana Sitar was able to stash $420 away per year.
At that rate, you could set aside $1,000 in about two and a half years — without trying.
But the beauty is you can set your own pace with Acorns’ features, so if you want — and can afford — to invest $1,000 faster, go for it.
The app is $1 a month for balances under $5,000, and you’ll get a $5 bonus when you sign up.
Month 2: Earn an Extra $100 by Joining an Online Focus Group
Surveys aren't our favorite way to make money, but if you're just vegging out on the couch, why not click a couple buttons and earn a few bucks?
MyPoints: This platform lets you earn gift cards for taking polls, answering surveys and other things you do online — a great way to cash in on long lines or an endless commute. You’ll earn a $5 bonus when you complete your first five surveys.
Opinion Outpost: What sets this apart from other survey sites is it gives away $40,000 every year. It has a quarterly drawing for a $10,000 cash prize — and for every survey you complete, you’ll get one entry into the sweepstakes!
InboxDollars offers several short, daily surveys you can take. If you take all of them each day, you could earn an extra $730 a year — not too bad.
Month 3: Ditch Your Card
Did you know that at least one in five cardholders are carrying around a credit card whose fees and rewards don’t match their actual spending habits, according to a 2016 study from J.D. Power.
Consider the following math problem: if you could increase your rewards rate by 1% on only $1,500 of spend per month, you could be pocketing an extra $180 every year!
Month 4: Consolidate Your Debt to Lower Your Bills
If you want to keep a closer eye on your credit, get your credit score and “credit report card” for free from Credit Sesame. This website breaks down exactly what’s on your credit report in layman’s terms, how it affects your score and how you might address it.
Once you know what’s in your credit history, Credit Sesame shares personalized resources and recommendations so you can figure out how to fix it — a better score could mean even better interest rates.
When it comes to debt, a lot of us are being crushed by credit card interest rates north of 20%. If you’re in that boat, consolidation and refinancing might be worth a look.
A good resource is online lending platform Upstart, which can help you find a loan without relying on only your conventional credit score.
Unlike traditional underwriting models that use only the common FICO scoring model, Upstart’s technology looks at factors like your education and employment history to determine your creditworthiness.
It can help you borrow up to $50,000, potentially with better terms (e.g. lower interest or lower monthly payments) than traditional lenders. If managing many different bills and credit lines is a hassle, you can also use an Upstart loan to streamline all of your loans into one.
Month 5: Earn Cash Back on Everything You Buy
Believe it or not, there are sites that will give you free gift cards just for signing up with them.
One of my favorites is Ebates, the cash-back shopping site. They're giving away $10 gift cards if you sign up as a new member and earn your first cash-back rebate. You can choose a $10 gift card from Target, Walmart, Macy's or Kohl's.
You do have to wait 30 days, but it's free money so can you really complain?
Month 6: Earn Passive Income From Your Impulse Buys
It turns out deleting your emails could be costing you money. Intrigued?
One of our secret weapons is called Paribus — a tool that gets you money back for your online purchases. It's free to sign up, and once you do, it will scan your email for any receipts. If it discovers you’ve purchased something from one of its monitored retailers, it will track the item’s price and help you get a refund when there’s a price drop.
Make your space available during high-demand times in your area. Think: concerts, conventions and sporting events in your area.
Be a good host, and make sure your place is stocked with the toiletries you’d expect at a hotel — toilet paper, soap and towels.
Be personable. A lot of travelers turn to Airbnb for the personal touch they won’t find at commercial properties.
(Hosting laws vary from city to city. Please understand the rules and regulations applicable to your city and listing.)
If guests stay at your place for $100 a night just 10 nights a year, you'll bank a cool $1,000 over the year.
Month 8: Grow Your Money Faster
There’s no law that requires you to bank the old-fashioned way — at a brick-and-mortar bank with a crummy interest rate on your savings.
It’s time to move your money into the 21st century. An iOS app called Varo Money combines traditional banking tools with modern technology to help its customers become financially healthy.
Here’s the best part: Pair your Bank Account with a Varo Savings Account where you’ll earn 1.5% Annual Percentage Yield. That’s more than 20 times — repeat, 20 times — the average savings account, based on a 0.06% average reported by CNN Money.
Varo goes easy on the fees, too. As long as you use one of its 55,000 ATMs across the world, you’ll never pay fees.
Additionally, you’ll pay no monthly service fees, no minimum balance fees, no foreign transaction fees and no cash replacement fees. You’ll just pay any fees charged by out-of-network ATMs and cash deposit fees if you deposit cash in-store through Green Dot.
Month 9: Lyft Your Way to an Extra $3,000
Need a fun, flexible way to earn money this month? Try driving with Lyft!
Demand for ridesharing has been growing like crazy, and it shows no signs of slowing down. To be eligible, you’ll need to be at least 21 years old with a year of driving experience, pass a background check and own a car made in 2007 or later.
We talked to Paul Pruce, who’s been driving full-time with Lyft for over a year. He earns $750 a week as a driver.
Best of all, he does it on his own time. You can work days, nights or weekends — it’s up to you!
Work 40 hours a week for one month at that rate, and you could bank around $3,000.
Month 10: Earn up to $350 Opening Another Bank Account
It’s up to you to decide how to manage several bank accounts. Some of us find it’s helpful to have multiple places to stick our money for various purposes — we’re less likely to touch it that way.
You could always open an account, collect the bonus, and close it when you’re no longer using it — just make sure you read the details and know the requirements you need to meet to earn the bonus.
So you don’t have to juggle too many at once, try opening a new account every few months — and collect about $800 in bonuses in a year.
Month 11: Ditch Your Unused Subscriptions
We all sign up for stuff. Sometimes it’s easier to put subscriptions on a recurring payment and forget about it — looking at you Netflix.
These kinds of payments can be smart for paying bills and chopping down debt, but getting rid of the subscriptions you’re not using and socking away the savings could help you roll over the $5,000 mark this month.
If you can’t keep track of them all, check out an app called Trim. Once you sign up and connect your bank account and phone number, it analyzes your transaction history for recurring payments.
Just make sure you actually save the savings. Can you save another $200?
Put all these strategies to use and you could save more than $5,000 this year!
Month 12: Sell All Your Stuff With These Apps
Are your closets and shelves packed to the brim with stuff you never use — or even look at?
You can sell virtually anything on Letgo. This intuitive app lets you snap a photo and upload your item in less than 30 seconds. Not only does it remove a lot of the hassle of selling things online, it’s 100% free to use.
But there are also apps for selling more specific stuff to people who might actually be looking for it.
Have a bunch of movies or CDs collecting dust on a shelf? Decluttr will pay you for them!
Decluttr buys your old CDs, DVDs, Blu-rays and video games, plus hardware like cell phones, tablets, game consoles and iPods. Plus, enter FREE5 at checkout to get an extra $5 for your trade-ins!
You have a 401(k) — kudos for that, but is it doing what you need it to?
If you’re like most people, you have no idea whether your 401(k) is on pace for your retirement or just sputtering along.
Chances are, your 401(k) could be doing a lot better. Take control with help from Blooom, an SEC-registered investment advisory firm that can optimize and monitor your 401(k) for you and keep it speeding toward retirement.
It just takes a few minutes to get a free 401(k) analysis that will show you whether your investments are allocated properly and whether you’re losing money paying hidden investment fees. It’ll even tell you just how much more money your account could earn by the time you want to retire.
After that, if you sign up, it’s just $10 per month to have Blooom monitor and maximize your 401(k). Bonus: Penny Hoarders get the first month free with the code PNNYHRD!
Think of Blooom like a mechanic constantly fine-tuning your car’s engine so it gives you the best possible performance and gas mileage. Except it’s your 401(k) — and your future.
Yahoo Answers How to Save Money for a Car
Best Answer:hello - there are a lot of ways to save money, bit one of the ways I find the most effective and longlasting is actually knowing where it goes -
so here are some tips and ideas -
List out how much money you have coming in each month (paycheck, alimony, side jobs, etc.).
List out what your fixed costs are (rent/mortgage, car payment, car insurance, phone, cable, student loans, commute costs etc.) If you have credit card debt look at how much per card and which has the highest interest rates.
Track it by category -
retirement (401K, etc.) home (mortgage/rent) car (payment, insurance, etc.) gas cable/electric/water groceries eating out clothing movies/plays (include the popcorn) books newspaper (if you already paid your news paper or magazine subscription, figure out the monthly cost and include that) hanging out with friends (bar, pool etc) non meal related drinks/snacks (Starbucks, diet coke, snacks) cigarettes other other (other could be alimony, whatever, things I did not list out but you have to pay)
and you will see quickly where your money is going to go. Then you can see if it is all the right places, or if you want to make a change and not buy so many clothes, see so many movies (or pass on the popcorn) etc. Do you need to have the car you have or is there a way to get a vehicle without a car payment? Do you need HBO?
Consider what is really important to you and what is not and spend accordingly - so, since you are saving for a car, make sure every time you spend you ask, is this a necessity (if yes, ok) if not - will this help me get the car?
Be sure to put all left over money into savings somewhere and not just spend it on something else (or put it towards paying down credit card debt). And keep tracking what you spend for at least 6 months. that will help you get into habits and patterns that are good ones.
Retirement savings are very important, so if you have a 401K or the equivalent, dont stop contributing to that. I see so many questions here about stopping contributing or taking the money already saved out, dont do that. The value of the compound interest is huge.
Another Answer from Yahoo...
I save money on cigarettes by using a little machine to stuff tobacco into paper tubes, Not only is it quite a bit less expensive, I only stuff them one at a time, and I keep the different makings in different parts of the house, so it becomes a bit of a project to smoke a cigarette. If I have a pack of Tailor Mades around, I just smoke them one after another.
I found that by borrowing money to invest in some sort of term deposit I'm forced to make the monthly payments, and I don't have the money on hand to spend. And the money is making me something, rather than what buying a car on credit would.
Microsoft Money is a very effective tool for tracking your money and accounting for what it's spent on, but it needs to be used consistently. It's not a lot of work, but it's not very useful for procrastinators.
Another Answer from Yahoo...
You can try the envelope system. I don't know how much you want to save for a car, but you can simply put a certain amount of money each time that you get paid, then stick it in a drawer and forget about it until it's time to get the car. If the money is too tempting in the envelope, then just simply open a savings account, without a ATM card, and deposit the money that you decide to put in every week as soon as you get paid, until you get enough for the car. Good Luck.
Another Answer from Yahoo...
You need to setup some kind of budget so you know what you spending on currently and workout how much money that you can set aside for the new car each week.
Then setup another saving account preferable that earning good intereste and setup automatic transfer from your day to day account to the new account each week, that way you know you do automatic saving. NB: you can not touch the new account until you reach your goal to buy a new car, and do/setup the automatic transfer from your salary or as soon as you received your pay so you can only spend what's left on your day to day account which should be enough since you have workout your budget.
Once you reach your goal then you can use the account for another goal. once you get used to it then it is easier and will help you in organising your budget as well.
Hope it helps and good luck.
Cheers
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