While the economy is slowly trying to recover from the collapse of 2008 and a decade that hasn't seen great promise for investors, there is still a need to focus on building a nest egg for your future. Thanks to the miracle that is compounding interest, money grows, albeit slower than before, if you set is aside on a regular basis. The keys are knowing how to save, finding money to set aside and establishing a regular savings plan.
10 simple, painless tips to get you there include:
1. Punch up some numbers:
Do you have any idea how much you are spending? How much you have left? Punching up numbers will tell you where you stand at present. Most people have no idea of their weekly or monthly spending. It's important to know where you stand financially to determine how to save money and where to start saving money.
2. A little less luxury:
Separate what you spend on necessities from what you spend on luxuries. Then, find one luxury in which you can cut down. Whether it's dining out less or more Netflix and less $10 movie tickets, if you can minimize enough to put away $15 every week, it will add up over time.
3. Use your feet:
Gas prices can eat into your savings plan. Cut your spending on gas by walking or biking to local destinations. If you can fill the tank one less time per month, you can save $40.
4. Buy in bulk:
Don't just go to Costco, Sam's or other price clubs to stock up, look for bulk deals whenever you can. Even folks working from home offices have teamed up to get bulk deals. The money you save by bulk buying or going "Co-op" with colleagues or neighbors can be put into growing your nest egg.
5. Scale down large purchases just a little:
How about a 7-day cruise instead of 9 days? How about the Lexus GS instead of the LS? Going down one notch on large purchases, or leaving out a feature, can provide you with a nice chunk of change to help grow your savings plan.
6. Make it a habit:
There's an old saying, "Pay yourself first." In this case, once you know where you can save money, make it a habit of putting money away weekly for your nest egg. Then, you need to stick to the plan, which is where direct deposits become a godsend.
7. Don't make hasty investments:
The state of the economy is constantly changing. Interest rates and mortgage rates are changing often. By focusing on your savings plan and not jumping every time the mortgage rate or interest rate moves, you can build a nest egg slowly but surely.
8. Credit card control:
Take control of your credit cards before they take control of you. Stay within your limit and make sure you can pay your bill in full at the end of the month. Credit card debt can eat into your nest egg.
9. Grow money tax free:
If you have a 401k offered by your employer use it. If not, use an annuity or another vehicle that lets your money compound without a tax bite. Yes, in most cases you will pay taxes upon withdrawing the money, but by that time, you should have substantially higher balances than you would if you were paying taxes on your investments year in and year out.
10. Follow your investments:
Pay attention. You don't have to be an "active" investor, but you also don't have to just sit and watch as the markets crash taking your nest egg down with them. Those who were hoping to build a nest egg from 1999-2009 didn't have great results. Therefore, be ready to reallocate some of your funds and take a more conservative position to avoid big losses. Pulling back when necessary can save you a bundle and help you grow your nest egg.