7 key signs you’re mastering the savings game, say experts

Continually saving money and starting early is critical to financial planning and can determine not only your peace of mind and happiness, but your future as well. But with countless ways and advice on how to save money, how do you know if you’ve finally mastered the savings game? Slow and steady is common advice, but if you’re right It can be confusing to know if and when you’re on the right track.

GOBankingRates spoke to experts to explain some of the key signs that indicate you’re saving money wisely for long-term success.

1. You have a goal-driven budget.

First, some experts say that saving for the sake of saving or because you know you should save doesn’t work in the long run.

“The key is to take the time and effort to consider and set short-term and long-term life goals,” said Tanya Peterson, vice president of brand at Achieve. This includes anything from purchases to travel plans, he added. Until I send my kids to college and retire.

“If you focus on what’s really important to you, create a budget, create a savings plan and habits, it’s infinitely easier to get there,” she added.

2. Automate your savings

Some experts said automatic contributions to the right accounts are key to a healthy savings strategy.

“You don’t have to make a conscious decision each month about whether and how much to save. Instead, a portion of your money is automatically allocated each month to individual retirement accounts, 401(k)s, and/or or go into high-interest accounts,” said Paul Mueller, a senior fellow at the American Institute for Economic Research. “Also, sometimes the best offense is a good defense. Be sure to pay off any high-interest debts, such as credit card balances, car loans, or payday loans.”

3. Have a mindset of looking for small ways to save money.

Saving should become routine and routine. Saving money, budgeting and planning may seem difficult for some people, but you can learn how to make small plans, break down tasks into bite-sized pieces, and save a small amount of money each day. Getting into the habit of finding it is also effective. And surprisingly, those savings can add up to even more. Wake up early.

For example, buying a brand on sale for 50 cents or $5 off may seem trivial, but this habit will teach you to spend wisely and save wisely. says Peterson.

“Aside from shopping, decisions may also be about doing your laundry in cold rather than hot water, or getting creative and cooking a few meals from what’s in your pantry or fridge instead of running to the store or restaurant. “Hmm,” she says. Added.

4. Have an adequate emergency fund

According to Scott Lieberman, founder of TouchdownMoney.com, if you can build an emergency fund with confidence, you’ve mastered the saving game.

“Smart savers prioritize building an emergency fund,” Lieberman says.

This means you have at least 3-6 months worth of living expenses set aside in a separate account that you can easily access.

“This fund provides a financial safety net in case of unforeseen circumstances such as a medical emergency, job loss, or major car repair, and allows you to invest in long-term savings.” prevent it,” he added.

5. I am saving for the future.

As much as you strive to save day-to-day, long-term planning is also important, and that includes saving for retirement.

“For young people just starting out in their careers, retirement may seem too far away for them to relate to,” Peterson says. “But saving money so you can do what you want when you want to do it resonates with just about every age group. If your employer offers some kind of plan, take advantage of it. Especially If your employer provides matching funds, do so. If not, run an IRA. If you’re self-employed, talk to your tax accountant about the right plan for your situation. please.”

6. Know and monitor your “savings rate”

As explained by Madison Sharik, CFA, CFP, financial planner, and founder of Madi Manages Money, your savings rate is simply the amount you save divided by your after-tax income. This term was made famous by Financial Independent Retire Early (FIRE). ) community for the past 10 years.

“There’s a lot of information packed into one number. Your savings rate not only tells you what you’re saving, but also what proportion of your income you’re spending,” she said. . “That’s powerful!”

Sharik added that most people should be shooting for at least a 20% save percentage.

“The bottom line is, the higher your save percentage, the sooner you can retire,” she added.

7. Put your money into a diversified portfolio of low-cost ETFs and mutual funds using dollar-cost averaging.

It’s also a great sign that you’re saving money wisely for long-term success, says Alissa Krasner Maizes, founder and fiduciary financial advisor at Amplify My Wealth.

“Automating monthly contributions to an investment account that consists of a diversified portfolio reduces investment risk by diversifying your portfolio, increases your chances of growing your wealth with less expense, and paralyzes emotions and analysis. It reduces the chance that your investments will affect your life. By automating your investments, you can make investment choices,” she added.

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