Ways To Save Money
7 Little-Known Factors That Will Affect Your Ways To Save Money
We look for ways to save money, but one of the reasons why so many Americans fail in their dreams to attain wealth, is how to manage money. They have a desire to be financially secure, and to be able to retire in comfort. However, many of them make one or more of the following big money mistakes, and their dreams are shattered.
- A long term mortgage
The first place to look for ways to save money is at the terms of your mortgage. Countless Americans have no conception of what happens when they amortize their home purchase over a thirty (30) year period. When you stretch your payment out that long, you actually pay to the lender, two and a half times the original purchase price of your home.
- Allowing someone else to control your money
This is especially true in the case where one spouse in a marriage has complete control over daily finances. If that spouse dies or becomes too ill to handle it, or worse, you divorce, what happens then? It’s okay to let one spouse “handle the money”, but the other one needs to be kept abreast of what is being done, and must take part in decision making.
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The same applies to your investment portfolio. Many of us give our financial advisor authority to buy and sell, but we should read the monthly reports and be aware of what is happening. A lot of Bernie Madoff’s clients were mesmerized by his persona and alleged expertise, and ended up losing big time.
- Uncontrollable spending
Without a good budget in place, it’s so easy to develop wasteful spending habits. Quite often you don’t realize it until you amass substantial debt, usually in high interest credit cards. It doesn’t take long to realize that your current income is not sufficient to service the debt that you accumulated, and then the stress begins to take its toll. There are many ways to save money and taking control of wasteful spending is probably the best.
- No defined goals
There’s an old saying…”if you don’t know where you’re going, how will you know when you get there?” Without setting reachable goals, that is so true. If you really want to be motivated to find ways to save money, just find something specific that you want to accomplish.. It might be a mortgage free home, eliminate credit card debt, or simply to increase savings.
- Accumulating excessive debt
One of the easiest traps to fall into is using a credit card (s) unwisely. All too often, many individuals purchase items that they don’t need, or have the income to repay. They keep on charging purchases and when the credit card bill arrives, they can barely make the minimum payment. That continues for a few months, and before long, the cards are maxed out.
This results in the worst type of debt…high interest rates with minimum payments that usually never repays the principal balance. When you don’t repay the credit card bill in full each month, the true cost of purchases probably double at least. If you can’t handle credit cards properly, stay away from them and pay cash if you want to find ways to save money.
- Insufficient saving for retirement
How many of us, when we were young, and perhaps starting our first job, said “retirement”, we have plenty of time! I admit that I was one of those, and didn’t begin to save until middle age. Truth be told, many individuals in their twenties and even thirties, delayed saving for their retirement. They had the misconception that Social Security would be enough to cover their living expenses, and maybe it would have, except for politicians who found other uses for those funds.
The key is to start early in saving for retirement and try to put away 10% to 15% of gross income. There are many plans available that can be set up and funded with pre-tax dollars that will reduce your overall tax bill as well.
- Withdrawing retirement funds early
A survey was done for this big money mistake, and it was found that almost half of American workers cash out their 401(k) account when they change jobs. In addition, many others borrow from their 401 (k) account and never repay that loan. This results in a loss of retirement money, plus when the loan isn’t repaid, it’s reclassified as a distribution, and federal and state taxes are due plus a 10% early withdrawal penalty.
Retirement funds should not be touched, but I realize that there are times when these were the only funds available to feed an individual’s family. We’ve been through some rough economic times, and there are still many who have been unemployed for a year or more that have families to support.
Any one of these seven big money mistakes can cause severe financial problems for any of us. If you want to accumulate wealth and find ways to save money, do your best to not make any of those mistakes. These are saving money tips that can help you to have a sound financial future.