April: Ways to Save Money for Short-Term and Long-Term Goals
Spring is finally here, and our Building Wealth in 2018 series is in full bloom! In January, we focused on reigning in on overspending following the holiday season and started work on developing a budget for anticipated as well as unexpected expenses. In February, we took a look at the different types of savings options to help you save money for both short-term expenses as well as build wealth over the long-term. This month, we’ll focus on ways to reduce expenses substantially, so you can save money for short-term and long-term goals.
Now that you have a handle on your anticipated expenses, monthly budget, as well as a better understanding of the types of savings and investment options available, it’s time to start finding the money to begin saving and investing. First things first, everyone should have a savings account that they can easily access with two months of expenses accumulated. This will serve as an emergency fund in the event you should lose your job, experience a medical emergency, or incur an unanticipated expense, such as a major repair to your car or home. If you don’t have an emergency savings fund, then this is a good place to start. If you are saving for a specific investment, such as a down payment on a home or college tuition for your dependent, we will provide some tips to help you work towards your goal. If you’re ready to build up a longer-term investment strategy, you can use these same methods to save money towards your retirement, or an investment that can produce favorable returns for you in the future, such as real estate.
To get started, we’re going to take a closer look at some of the places where people are spending more than they really need to. By cutting back as much as possible in some areas, the money saved can be invested in your long-term goals.
|1. TV & Internet|
|According to Forbes, the average American Cable TV bill was $103/month in 2016. If you’re willing to eliminate this expense, but don’t want to lose out on your favorite TV shows, movies, and live sports programming, there are other ways to “cut the cord”. If you are willing to reduce that bill from let’s say $103/month to $30/month, you’ll save $73/month that can be saved or invested.|
|2. Push Your Vehicle a Little Further|
|Rather than trading in for a new car each time you make the final loan payment, try keeping your car a little longer. According to Cars.com, the average car payment is $509/month. If you kept your vehicle for at least two years beyond the end of your loan (assuming $2,000 in maintenance expenses each year), you would still have saved $342/month or $8,216 during those two years. This will go a long way toward building your long-term wealth!|
|3. Cook at Home|
|Now I know this one pops up on every list, but there is a reason why it does. According to the Bureau of Labor Statistics, the average American spends $3,008 each year eating out. Cutting back on this expense by changing your habits, can yield some extra money for saving or investing. For example, instead of eating out at lunch every day, why not pack a lunch? Let’s say you spend $10/day to pick up lunch. If you were to bring something from home, then you could potentially save $217/month or $2,600 a year!|
|4. Look at Opportunities to Negotiate Your Bills|
|Contact your credit card lenders, home and auto insurance representatives, and any service providers you use, such as oil or propane, landscaping and snow removal. Ask them for suggestions on ways you can modify services, interest rates, or deductibles to reduce your monthly expenses without risking a much larger expense down the road. Can you change your service schedules to extend the time between visits, reduce interest rates based upon your payment history, or move to an annual heating payment plan offering a discounted rate? You may find savings in these areas of up to $100 per month or more, depending on your current expenses.|
Using any one of these tactics could potentially reduce your expenses by hundreds of dollars! The savings could easily contribute to your two-month of expenses set aside for emergencies, short-term savings needed for a down payment on a home, or your long-term investments. Speaking of long-term investments…have you given any thought to meeting with a financial advisor to discuss developing a long-term investment strategy? The team at Independence Financial Advisors has over 70 years of experience with assisting individuals and families with building an investment strategy to meet their needs. You can even schedule an appointment with an IFA financial advisor online.
Check back in next month to learn more on other ways you can save money to contribute to your long-term goals.
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