In addition to monthly bills that likely eat away at your entire paycheck, the next most important piece is saving for your future. Whether that is an employer 401k account, or an IRA, your retirement should be a priority early on, because even though it may even be decades before you retire, that time will go by so fast that you don’t want to miss out on funding your account when it’s already too late. By freeing up money you can increase the funding of your retirement account.
Follow a Budget
Creating a budget, a budget is the easy part, it’s actually following it is the difficult part, so much in fact that most Americans actually do not follow a successful budget, meaning they either never created one or could not follow through with it. With the obvious goal of having more income coming in than going out, where you allocate your funds and how much may need to be tweaked going forward, so after each month it’s a good idea to review all charges and where you came up against what you allocated for each one.
Build an Emergency Fund
You never know what life will throw at you, so it’s always good to be prepared for any unexpected charge that may come up. Whether it is for a car repair, your furnace breaks down, or a large vet bill, it’s always good to have cash on hand so you don’t have to put on a credit card and go into debt. If you can have a few months’ worth of expenses on hand in an account, you can be prepared if you get hit with any unexpected event that occurs, but at least will be able to pay for without throwing your budget and credit card out of whack.
Reduce Unnecessary Expenses
After all of the monthly expenses are paid, minus factoring in gas and food, what’s left is spending money and that’s where you can start to drill down from there. A great way to see where your money is going is to take your bank or credit card statement from the prior month and actually go line by line. If you circle the items that you probably could have avoided and add up all of those costs, you could be shocked at what that total is. One of the largest areas where you can reduce expenses is going out to eat instead of opting to go grocery shopping and eat at home.
Take Advantage of Credit Card Rewards
Although may have had a bad reputation in the past, credit card can actually make financial sense to use for all purchase. In addition to fraud protection, the rewards are excellent where you can earn miles, points, and even dollars on the purchases that you would make anyways. Once you are used to the rewards, using a debit card (or another credit card) would just be leaving free money on the table otherwise. You just have to be careful to not use a credit card just for the rewards, or you could get yourself in trouble with the balance.
The post Ways to Free Up Money to Increase Funding Your Retirement Account appeared first on IRA vs 401k Central.