Have you started saving for retirement? Vanguard’s “How America Saves 2016” report shows that one third of Americans contribute less than 4% of their income to their retirement. Saving any amount for retirement can be challenging, but it’s important for a strong and secure financial future.
Simply Money Advisors’ rule of thumb is to save 20% of your take-home pay. This may seem like a large number, but if you start small it’s an obtainable goal. Starting small can be a great way to ease into saving for retirement. Here are a few simple ways to grow your retirement savings:
1. Cancel subscriptions: Have you ever signed up for a subscription and not used it? The headache of calling the company or figuring out where to cancel it seemed worth the $10 a month. From Spotify to Netflix, consumers are subscribing to services they’re not using. Those small payments can add up quickly if you’re not proactive.
Schedule a time during the week to go through your credit card statements. If you see a subscription you haven’t used in several months, it’s time to let it go.
Subscriptions can also include car insurance. Shopping around for the best rate may also take some time, but it will be worth it in the long run. Even if you save $10 a month over five years, that could be an extra $600 toward retirement. It all adds up.
2. Learn how to cook: Eating out every day can become expensive fast. By meal prepping during the week you can make your money go further. Get creative and find recipes your entire family can enjoy. Not only will you be saving money, but you will be building a skill that you can use for the rest of your life.
3. Sign up for spending challenges: Have you ever heard of a spending challenge? You may have seen one on social media or on various websites. The idea is to create positive spending habits. For an example, your spending challenge could consist of putting five dollars away every day for one month. Spending challenges are structured to be simple and raise awareness of where your money is going.
These challenges can be beneficial when trying to increase the percentage of your income you put toward retirement. By raising awareness of where your money goes, you’re creating better spending habits.
4. Negotiate your cable bill: It’s a common myth that once you sign up with a new cable company you’re locked into a certain rate. This is far from the truth. Cable companies want to keep you around, and usually have to negotiate to be competitive. Try calling your cable provider and negotiate a better monthly rate. Ask them if they have any specials you qualify for or if you could remove certain services you no longer need.
5. Use a grocery list: How many times have you gone to the grocery store hungry and bought $20 extra of food that went to waste? Most likely, it was more than once. Keep track of the amount of food your family eats and make a grocery list based on that quantity.
By keeping track of your food inventory, you can make more conscious purchases at the grocery store.
6. Start with 1%: Saving 20% of your take-home pay can initially feel overwhelming. Starting small and increasing your percentage over time may put your pocketbook at ease. Try increasing your savings amount by 1% every month. This will give you some time to adjust your budget and slowly cut back on poor spending habits.
The Simply Money Point
Planning ahead for retirement will help you protect your money and make it grow. No matter how small you start your savings percentage, just start.
To find out if your budgeting habits have you on track to meet your financial goals, we invite you to talk with our team at Simply Money Advisors.