If you don't save, you'll never reach your goal. As obvious as this might seems, far too many people never even start to save. If your employer offers a 401(k) plan, enrolling in the plan is a great way to put your savings on autopilot. Simply sign up for the plan and contributions will be automatically taken out of your paycheck, increasing your savings and decreasing your immediate tax liability. Furthermore, if your employer offers to match your contributions up to a certain limit, be sure to contribute enough to get the full match. It's like getting a guaranteed return on your investment!
Studies have shown that the majority of the returns generated by an investment are dictated by the asset-allocation decision. If you are looking to grow your wealth over time, fixed-income investments, or a certificate of deposit (CD) aren't likely to get the job done, and inflation can take a big chunk out of your savings.
Part of long-term planning involves accepting the idea that setbacks will occur. If you are not prepared, these setbacks can put a stop to your savings efforts. While you can't avoid all of the bumps in the road, you can prepare in advance to mitigate the damage they can do. Read Build Yourself An Emergency Fund to help structure your finances to avoid financial disaster.
Vacations, car, kids and all of life's other expenses take a big chunk out of your paycheck. To maximize your savings, you need to minimize your spending. Buying a home you can afford and living a lifestyle that is below your means and not funded by credit cards are all necessities if you want to boost your savings. The Beauty Of Budgeting can help you figure out how to make it to the end of the month before you run out of money.
7. Monitor Your Portfolio
If you're a mid- to long-term investor, there is no need to obsess over every movement of the Dow. Instead, check your portfolio once a year and rebalance your asset allocation to keep on track with your plan. Read Rebalance Your Portfolio To Stay On Track to learn more.
Take advantage of every savings opportunity that comes your way. Make the maximum contribution to tax-deferred savings plans and then open up a taxable account too. Don't let any chance to save get away. Read Not All Retirement Accounts Should Be Tax-Deferred to learn the advantages of a taxable account.
When you reach age 50, you are eligible to increase contributions to tax-deferred savings plans. Take advantage of this opportunity! For more ways to save money and increase your nest egg for the fast-approaching golden years, read Retirement Savings Tips For 55- To 64-Year-Olds.
"Get-rich-quick" schemes are usually just that - schemes. The power of compounding takes time, so invest early, invest often and accept that the road to riches is often long and slow. With that in mind, the sooner you get started, the better your odds of achieving your goals. Read For IRAs, Time Is Money for a discussion of the value of compounding.
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