Don’t ex out of this tab. Don’t do it! Okay, good. So maybe we’ve arrived at the most boring topic of our Maximizing Your Budget series. I’ll give you that. But it also happens to be the most important. Unlike other budgeting categories that can sometimes be in decent shape just by coasting along, the Retirement & Savings category has to be purposeful to be successful. So today, we’ll delve into the deep dark mysteries of saving money and saving for retirement and how to maximize both like it ain’t no thang. But it actually is a thang, and by the end of this post, you’re gonna own it. So here are all of our tips and tricks, in order from mostest important to most important.
Start investing now.
When it comes to maximizing savings, timing is everything. The sheer amount of money required to retire can’t be crammed in at the last second. And putting off saving for retirement even a few years can mean the difference in hundreds of thousands of dollars. Why? Well, it’s all thanks to a little friend of ours called compounding interest. Compounding interest takes the money you’ve saved and makes money babies with it. And those money babies have babies. And those babies have babies, until money babies are running around everywhere. It’s pretty cool.
So what are some ways to start investing now?
- Meet your employer’s 401k match. Do this. Do it now — it’s free money! We even think it’s worth doing while you’re getting out of debt because you can never get those years of compounding interest back.
- Max out your Roth IRA. We’ve done a post all about this topic specifically. But to put it simply, Roth IRA’s are a nice 401k alternative to help ensure you’ll have plenty of money stored up come retirement age.
- You could also invest in a Traditional IRA, contribute to an HSA, open a 529 for the kiddos, invest in an I Bond, or pad your 401k even more. The possibilities are endless! And fun, oh so fun. If you want more details about any of those, read all about it here.
Set goals & budget backwards.
When it comes to saving money, the heart of it is pretty cut and try. It’s simply making more money than you spend. But how do you know if you’re saving enough? Well, that’s where goals come in. #goals #lifegoals #squadgoals #ilovegoalsgivemeallthegoalsespeciallydoughnutgoals. But really, goals are where it’s at. They make you ask the hard questions: What do I want out of my life? When do I want it? How much money will I need to save each day/week/month/year to get there?
That’s where backwards budgeting comes into play. Rather than creating a budget from all your expenditures, you create a budget based on how much you need/want to save each month to reach your goals. And if your expenses make that savings amount impossible, you find ways to make more money. It’s easier said than done, but it’s possible. It just takes is a shift in thinking and some hard work. If you want to start a backwards budget today, here are a few more details on how to do it.
Treat yo’ self.
As odd as it may sound, one of the keys to successful saving is rewarding yourself. While we think it’s important to save as much as possible, we don’t believe in extreme budgeting to make it happen. Saving that’s too extreme is unsustainable and ultimately unsuccessful. While working towards a savings goal may feel a bit uncomfortable and tight (which is sign that you’re doing it right), little rewards here and there will help you reach your goals. Without little splurges each month, you’re more likely to cave and give into a few huge splurges that will set your savings goals off track for months.
Put all those together, tie a big bow around it, and I give you the gift of plenty of savings and a happy retirement. And achieving all your #goals. Magic! So those are our very best Retirement & Savings tips. Now we want to hear yours. What would you add to this list?