How do i force myself to save money?

Question

Its like me and money don't get along.

I dont work for a company with a 401 k

Answer 1

The easiest way is to set something up that happens automatically without you having to be involved each time an amount is added to your savings... i.e. direct deposit of a paycheck if you have several jobs or portion/percentage of a paycheck if you have only one. Also, if you can make the savings not easily accessible to you it will be easier to not spend it. A 401K through an employer is a great way if you're trying to save just to save with no immediate purpose for saving. If you're trying to save for something in the more immediate future, a CD (Certificate of Deposit) at a local bank would be my recommendation.

Also, you will find, the easiest way to save money is to work more. We tend to spend more money when we are not working and have idle time. If you can add another part-time job doing something you enjoy, it's almost like you're being paid double... once for the work and once for the fact that you're not spending while you're earning. Does that make any sense?

Answer 2

A 401k is optimimal because it comes out before you get to touch the money.

But since you don't have that, I'd recommend setting up a mutual fund that automatically takes money from your account on a certain day each month.

It's known as dollar-cost-averaging. There is a small mathematical advantage to doing this (you buy less shares when the price is high, more when it's low, so you can actually profit when fund just oscillates back and forth). There are also psychological advantages (you don't overbuy when the market is high, and it forces you to buy when the market is in the toilet).

All it really takes is the discipline to know that some day, say the 10th of the month, they will automatically take the money out, and you have to make sure you have the money in place. Not quite as good as an automatic paycheck deduction, but with some discipline it will serve the same purpose.

Start with an amount you know you can handle (say $100/month), and then increase it every year, like when you get a yearly raise, up it $50/month.

All big mutual fund companies offer this. Most will waive a minimum account balance if you do this. I've had good luck with T.rowe Price and Dodge & Cox.

Answer 3

A 401K plan is an ideal tax free method of savings for long term retirement goals and should be automatically taken off the top. You won't have taxes taken out so you'll have more saving power especially if you employer matches. Sign up for that immediately if you are not already in the program at work. If your company does not have a 401K, if you are maxxed out on it, and if your company does contribute to that plan as a match, go with a Roth IRA where at least you don't have the same stiff penalties (10%) should an emergency come up. A 401K is harder to close out than a Roth IRA. Remember the goal of a 401K is for retirement so you want that little nest egg in 10, 20, 30 or whatever number of years. You should also consider a more liquid savings account for emergencies and recommended is 3-6 months of living expenses in the event of disability, job loss or financial troubles. Why pay credit card rates of interest if you have some savings available to help you? I do agree that your savings and investment plans should be automatic. Your bank can set you up with automatic savings deductions. You can't spend what you don't see. If you can live on 80% of your income, you will have a much more comfortable future with that other 20% in a long and short term savings plan but start today to get a plan of action going.

Answer 4

Joined a termed saving which drawing option on certain years (60 months or so) and offer a great prize up front, or buy an "investment +insurance" type pension plan.

I have bought the second type, and I leave the money with the insurance company to grow. I'll look at the balance yearly (whenever I make the payment/deposit) and the interest was greater than the bank saving in average. The saving could not be retrieve, unless you want the insurance to be closed.

I think you must force yourself to save your own money through other people, rather than doing it on your own. But don't forget to review the terms, after all, you want to save your money and not giving it away for some silly expenses.....

Answer 5

this is what i did. I got two accounts at two different banks. You use one account for your personal expenses. Every time you get paid stash 100 in that second account or whatever you can afford. Make it a ritual if it comes with a debit card cut it or demagnitize it, simply don't use it. Soon you'll have a big amount saved up. The best part is it gets interest so its better than keeping money under your mattress. Budget without those 100 dollors and you wont miss the money. Simple and it works

Answer 6

To start, if you work for a company with a 401k, particularly if they match, get in now. That's the least you can do- you'll never see the money, so you can't spend it...

Answer 7

To start, if you work for a company with a 401k, particularly if they match, get in now

Answer 8

Buy insurance with force saving. When it mature, it will pay you attractive sum that you can't resist