Saving money is generally best done on a regular, consistent basis. After all, for most of us, we’re just getting around the same amount of money every month, so it would be hard to put away a lot of money since you only have so much at a time. At times like these, it’s the perfect time to practical a frugal lifestyle and stock away some cash in case of emergencies. Here’s a few tips to help you along!
Put aside part of your paycheck every month - This is probably the most effective way of making sure you have something for that medical emergency down the line or Ivy League college graduation your kids might want. Treat it like you would any other fixed expense. You wouldn’t not pay your mortgage or your electric bill would you? Then don’t forget to pay your savings account!
When you get your paycheck, just deposit that 10% or 20% of it into your savings account and pretend that it doesn’t even exist. That money is an investment in your own future, so why would you rob yourself the right to medical care when you need it or your kid’s dream of going to a good college?
Invest Your Savings - Thankfully, your savings account can grow itself in time. Whether you choose to invest it in treasury bonds or a 529 plan for you or your family’s education, make sure to put your money to good use. That few thousand dollars you put in now might be enough to fund your child’s education in 15 years! Through the magic of compounding, your savings account can grow signficantly in size without you adding signficant amounts of money, so there’s all the reason to pick an investment that is right for you.
If you’re more conservative, pick things like treasury bonds, money market accounts, and very high grade bonds. If your savings account is rather large and you already have a substantial income, then you might want to invest your money in risker assets such as stocks. Make sure to do a lot of research and read up on stock investing tips though to keep yourself well informed. After all, it took you years to save up!
Save Early, Invest Early - It is greatly to your advantage to invest early if you want compounding to work in your favor. Not only can your $1000 turn into $1,000,000 over the course of half a century, you can invest in riskier assets that average out more over the long run. Wouldn’t you rather put away an extra $1,000 now if you knew it’ll give you an extra $1,000,000 when you’re much older? It makes a huge difference to you further down the line whether you invest now or in 5 years, so start getting your money in now - you’ll thank yourself later!