You’re a human being— of course you want to save more money, but life happens, and sometimes trimming your spending means sacrificing things that are essential to your everyday life. Fortunately, there are pretty simple ways to save money so that you don’t have to worry when faced with a potentially dire situation.
In this article, we’ll give you the lowdown on six of our favorite life-saving money management tips that can help you stay aligned with your financial goals and living comfortably even in stressful circumstances.
1. Stay ahead of tax season
Dealing with the IRS is probably at the bottom of your “things I want to do” list. There’s no arguing that filing your individual taxes is an already challenging feat, but matters are only made worse when you’re not properly prepared come tax season.
In order to stay on top of your taxes, you may find it most beneficial to hire a professional who understands all of the intricacies of the U.S. tax code. If you can’t afford professional assistance, create a calendar that maps out when to organize your documents. This will keep you well prepared throughout the year and make tax time a total breeze. It’ll also serve as the perfect reminder to stay on an IRS payment plan you may have in place.
2. Build an emergency fund
Although it’s extremely important to have general savings, building an emergency fund is a brilliant way to develop healthy money management habits. Generally speaking, your emergency savings should have enough cash to cover a few months worth of regular costs in the event that you lose your job or encounter a life-altering event.
When starting your emergency fund, it pays to start small so as to not overwhelm or deplete your usual expenditure. For example, set your first goal at saving $1,000 per quarter. That way, you’ve got something in your emergency fund if you need to pay for unexpected car maintenance, doctor’s bills, or any other surprise expenses.
3. Practice the 50-30-20 rule
The 50/30/20 theory specifies that 50% of your earnings should go toward your needs (i.e. housing, gas, groceries, etc.), 30% to wants (i.e. clothing, sports, extracurricular activities, etc.) and 20% to savings. If necessary, you can skew these figures based on your financial targets.
4. Put away money for retirement
While retirement may seem far away, it is never too early to start saving. In reality, it’s best to save for retirement while you’re young, as this will allow your savings to mature for decades.
Compounding growth is the number one reason why it is so incredibly beneficial to start saving early. This is a scheme in which you gain money from returns on your savings, and these gains are reinvested along with the principal balance, which then allows the money to accumulate exponentially over time. That said, it’s plain to see that the sooner you start saving, the higher probability you’ll have of building a financially rewarding retirement savings account.
5. Consolidate Your Debt
Interest on credit cards, as you very well know, can make it virtually impossible to pay off your cards. However, that doesn’t mean being free of your debt, or managing it well is out of reach.
There are a few debt consolidation applications that can help you pay down your debt quicker. With the support of one of these genius apps, you can get a little closer to financial independence. By pooling your credit cards into one annual charge, you can make your bill pay smoother and apply for a reduced interest rate, meaning you pay even less over the time it takes you to pay off all your credit card debt.
6. Start investing
As daunting as investing may initially appear, it’s actually pretty easy to get into as a beginner. Not only is investing an outstanding way to earn passive income, but it’s also a great way to set yourself up for success years down the road If you’re new to the finance field, consider starting small rather than spiraling in and investing every single cent to your name.
Although investing may be one of the quickest and easiest ways to steadily create capital, it is important to consider the danger that comes with the territory. There is no predicting how the market will rise or fall, but with the right direction, research, and guidance, you can protect yourself and your finances from massive losses.
Start on your path toward successful money management with these tips. Did we miss anything? Let us know your best life-saving money tips in the comments below. and see how much you can save just by making a few simple changes.