Saving for retirement is a nice thought, although not always put into practice. Have a look at your investment account savings, is the balance where you want it to be? A better question may be, are you on track to retire at your target age?
For some people the answer may be yes and for others it’s no. Why is that? As a financial planner I can tell you from experience that it’s most likely because people don’t think about retirement savings until they start approaching their retirement. When in fact we should always be thinking about our investment account savings, no matter how old or young we are.
Saving $10,000 a year equals $833 per month or $384 bi weekly. That sounds do-able doesn’t it? If you want to increase your investment account savings there are some very easy things you can do throughout the year to boost the value of your account such as:
- Make savings a part of your budget
- Set up affordable contributions
- Add in your yearly bonus
- Contribute your tax refund
If that’s still not enough to bring you to the magic $10,000 number don’t worry, I have some more ideas. You can save even more money each year by making these three small (and painless) changes/cuts in your daily habits that won’t disrupt your life.
$1,460 on coffee. Ah Starbucks, the indulgence and weakness many of us have. I’m guilty of it, but now that I’m saving for a house (more about that another day) I have cut back to visiting the coffee-love-of-my-life once a week. If you spend $4 a day for 365 days a year it adds up to $1,460. That’s definitely money that can be saved.
$2,600 on eating out. Think about how often you grab take out food for dinner on your way home from work or go out for dinner with friends. If you cooked at home and avoided eating out in restaurants just one day a week you could save $50 per week which adds up to $2,600 per year.
$4,000 on vacations. According to the Latin Post, Americans spend approximately $2,000 per vacation. If you stayed home for one year you could save an extra $4,000 every year.
That’s a total savings of $6,746.
Now let’s add that up with 3% compound interest over the next 20 years. Do you want to guess how much you can save for retirement just by making three small changes in your life?
If you cut out one coffee per day, skipped the restaurants once a week and didn’t splurge on vacations you could save $1,798,058 according to Chase Bank.
Notice that I didn’t even mention bad habits like drinking and smoking. If you have some personal vices ask yourself how much a bottle of wine or a pack of cigarettes costs. Before you pull out your wallet, think about how that money can be put to better use. Kicking bad habits can definitely kick your investment account savings into high gear.