The Best Tips for Creating the Perfect Savings Cushion

Cutting expenses and savings money is not rocket science but there are ways to do it smartly so that you get the satisfaction of knowing that you are doing a great job while the results troop in quickly.

Don’t waste a minute

Don’t wait for your salary raise or the next paycheck or grandmas’ gift check to start saving, you can do that straight away starting NOW. Don’t let the fact that you may be earning less deter you, invest a smaller amount.

Small drops make an ocean

The moment people say “savings” the mind conjures images of thousands of dollars; this need not be so, it’s better to start now with a nice crisp $100 note. Pledge whatever windfall you get into a savings account.

Outlandish budgets fail faster

Keeping the budget simple and realistically matched to your income is the best way of ensuring success. Savings huge amounts by making great sacrifices in the short term may burn you out and take the joy out of living.

Commit goals in writing

When you commit in writing that you are aiming to secure $3,000 for home repairs it has a greater chance of succeeding. Such a commitment will foster sincerity which in turn will spur diligence in pursuing the goal.

Save under different expenses categories

Maintain separate savings accounts for expenses like mortgage and home repairs, utilities and insurance, food and clothing, and so on. This will give you a better idea how much goes under each expense on a monthly basis.

Receive net pay after the deductions

Getting your salary section to trim off the monthly retirement savings before you receive your pay will give you fewer reasons to misuse that money.

Finish a loan but don’t stop issuing the check

Instead divert the check into an investment fund or retirement kitty. It is a type of snowballing where you can start clearing smaller debts first and then use the amount released to reduce higher debts.

Prepare for emergencies

You realize the value of an emergency fund when you suffer a crisis like a job loss or medical emergency that prevents you from working long periods. Financial discipline is the key; cut cable costs, reduce credit card dues, try accelerating the payments on car and home loans. Fund the emergency savings with as much cash as you can muster.

Retirement planning is best when started early

If you plan to retire in the mid-sixties start funding your 401k as early as when you hit 22 years. Even a relatively minor contribution of $150 will see your money compounding to something like $1.25 million in retirement savings assuming you investment in stocks that are yielding an average return close to 8.5% annually. If you postpone the retirement funding by a decade into your thirties you will save only $500,000, a huge reduction.

The 401k is a good scheme that is offered by many companies, some of them with an employer matching contribution. This way a contribution of $150 gets boosted to $230. This allows you to save on a regular basis without facing the taxes in the interim. Remember that your contribution is not likely to remain at $150 throughout your life; it is bound to increase thereby boosting your retirement nest egg substantially.

Leveraging the auto collateral loan for boosting retirement savings

The loan for vehicle title depends exclusively on the collateral of your car and is not linked to your past credit whether good, bad or worse. The title lander assesses the resale value of the car and apportions a fraction of that value as your car equity loan. Sometimes the auto equity loan amount scales almost 70% of the vehicle value. This may result in releasing sums in excess of $10,000 that will come in handy in boosting an emergency fund, or be diverted to retirement oriented investments that yield higher returns like growth stocks and stock index funds. The cash loan for title will not extract interest rates beyond 25% APR and the loan can be easily repaid through lower amortized payments without your budget taking a hit.

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