What's the Best Way to Save Money?

Question

Lately I've been sending $10 a day to my stock account and it seems to be working. Anybody have any other ideas?

Answer 1

Saving money depends on 2 things:
1) Increasing Income.
2) Decreasing Expenses.

Obviously, you need income, but I believe #2 is much more important. Most expenses can be decreased dramatically, or even eliminated. Share rent with lots of people, or live at home or in a low-cost area if possible, avoid owning cars (they suck a lot of money), eat out/travel less, buy less (or better yet, nothing) or secondhand, don't engage in expensive sports/hobbies, etc. Cut all water, power, phone + cable bills as low as possible. You have to go without in your material life - but you'll end up having more material in your account.

Live poor - because actually, you are poor. By my personal definition, if you need a job in order to feed yourself, you're poor.

$10/day for $3.6K a year is a good start, but I'm sure you can do a lot better than that (depending on your income).

I aim for saving at least 50% of income. I only make 18K/year now, but I save about 10-12K. If you can live and save like this for just 4 years, you have 48K. Then I started to take it easy, because I started investing my savings (in stocks). At this stage, your money starts working for you, which is a lot less tiring and time consuming.

After you saved a nice chunk of money, you can start spending more money if you want (w/o touching your initial principal, of course). You can lower your savings rate from 50% to 25% or whatever. Live like a poor Spartan for 4 years - so that you can live like a rich Trojan king later. It's not a bad trade off.

Many people may not be able to handle living on a streamlined financial diet for 4 years. They think it's akin to suffering because they're so used to (or spoiled with) material comfort. But actually, it's a great growing + learning experience. You'll acquire discipline, self-control, focus, planning, responsibility, self-understanding, and the ability to know how to have fun and enjoy life w/o money. Plus you get more job flexibility, financial freedom and peace of mind. These benefits greatly outweigh the costs.

Answer 2

At $10 per day, you should look into a Roth IRA. If you qualify (earn less than $95,000 per year) then you can contribute and you won't need to pay taxes when you pull the money out at age 60+.

Most of you money when you retire will be growth (not contributions). So saving in a Roth with tax protection is important.

Answer 3

There is a great book on the subject, "The Richest Man in Babylon" which explains the concept of savings very well, and has a lot of motivational suggestions. For me, the best "trick" has been to establish goals- how much do I need to retire- and these goals have been based on the things I hope to do in retirement. So, I am saving for a purpose. Makes me look at every penny in a new light!

Answer 4

Automatic, tax-advantaged savings plans are the easiest, safest and by these measures the best way to save money for the long term. If your company has one, sign up for a 401(k). If not, set up an IRA and have contributions automatically sent to it from your checking account every month. The best savings plan is the one you don't have to think about (too easy to cheat) and that has tax advantages.

Answer 5

I personally look after my family budget and all spending items need to be accounted for so that at any point in time you know where you are. Requires discipline but that's the only way.
To help you with budgeting I'd recommend a personal finance software by Australian business Parcus Group.
Easy to use program with features including budgeting, financial planning, real estate analysis, shares valuation, life insurance...
Costs US$24 so it's not a huge investment but absolutely great value for money.
You can get it on http://www.parcusgroup.com/index.html

Regards

Answer 6

Have lots of it, it makes it easier to save some.

That's awesome by the way that you are socking away 10 bucks a day. That's $3650 a year not including interest.

Answer 7

Open a 401k through your employer and start contributing atleast 6% of every check to it. Set up automatic contributions to your investments so it will happen every month without you doing anything. Write up a monthly budget and make savings part of it.

Start early! The sooner you start saving the better off you will be.

Answer 8

Get a UL (or VUL) policy. It's a great way to avoid taxes in your retirement. And the best rule is to save 10% of your income.

Answer 9

Always save 10% of everything you make!!!

Answer 10

Since we live in India we do not know various schemes available in America or where do you stay.I know that any where in the world INSURANCE, POST OFFICE,IN THE FORM OF BANK DEPOSIT SOMETIMES IN THE FORM OF PRECIOUS METALS WILL HELP YOU .