Saving and investing when done effectively helps us live financially healthy lives. And, not just saving but doing it right. You will find in this article, saving and investing tips for all ages. Its never too late or early to get started.
Saving and investing remains two requisite paths for anyone on a journey to financial freedom.It is quite interesting that anyone can take this path. Children, Teenagers and Adults can save and invest in ways that opens doors to financial freedom.
So what ways should this be done?
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What habits should be cultivated?
Here Are 7 Saving And Investing Tips For All Ages
Track Your Earning And Spending
Monitoring your cash flow remains the number one way to get started. The thumb rule is to live according to or below your means. If you find yourself spending more than you earn or going into debt due to your lifestyle, then you need to cut down on some things. Tracking your earning and spending is one of the biggest saving and investing tips.
It could be eating out, expensive hair dos, unnecessary designer outfits and more. Track your spending. Create a list and distinguish your needs from your wants.
Parents can help their kids learn this by allocating calculated allowances to their kids. They should help them cut out on unnecessary things and live based on allocated allowances. This is the first step to make a savings or investment.
Set A Goal
You have made the decision to start a savings. Now you have to set a goal. How much will be saved? What amount should be your savings goal? For adults, you should be aiming to save up to the amount you spend monthly for six months.
For kids and teenagers, they could set a goal to save an amount worth six months of their monthly allowance. To meet the goal, you have to be willing to spend less and sacrifice some wants.
An easy way to stay determined to the goal is putting a small amount away consistently. Its simpler to sacrifice small amounts monthly.
Have A Strategy
Saving is not an easy thing to commit to. Regardless of age, it is natural to want to talk yourself out of it. The sacrifice is hard but the gain is sweet. Having a strategy will make commitment way easier.
So what is the strategy? For anyone serious about saving, your savings account should be separate from your checking account. When you get your monthly pay, have a portion of it transferred to your savings account before any thing else.
Prioritize your saving over all other expenses and deposit amounts into your savings account immediately you get your pay check. You could consider automating your savings so the amount is deducted as soon as you get your pay. This will save you from the temptation of wanting to spend it.
For kids, they can put away tiny amounts in piggy banks before diving into the whole allowance. With proper guidance, they will get used to the habit.
Save In The Right Place
A good way to stay motivated about your saving is putting your money in places where you get an interest yield. The yield can be gratifying and you will feel motivated to save more.
Savings accounts generate interests over time but there are better options that give higher yields. You could consider certificate of deposits, Roth IRA, Employer supported retirement plan, money market accounts or treasury bills. This options will get you better annual interests that will motivate you to save more.
The savings in these accounts can serve as your emergency funds when unexpected situations arise.
Parents can support their kids on their savings journey by setting up something similar to the Employer supported retirement plans. When the kids have saved up to a certain amount, the parents should pay them interests for the amounts saved. They will be excited about the bonuses and happily stay committed to their savings plan.
Debts could counteract your savings or investment plans. You will find yourself busy paying off the interest from your loans and debts that saving becomes difficult. Avoid borrowing and save up for big projects instead.
If you already are in debt, the first step is to pay off your debts. Cut down on extra expenses and focus on settling all you owe. Avoiding debts is one of the key saving and investing tips that will aid financial freedom.
Kids and teenagers can be guided by their parents to avoid debts too. If your child or teenager demands for extra allowance, you can make them pay for it with an additional interest. This will teach them to make do with their allowances while staying away from debts.
Raise Your Earning
Its okay for your lifestyle to require more money so long as what you are going for falls in the circle of your needs. Looking to raise your earning is a smart way to also raise your savings. You could consider getting a specialized degree or an extra certificate.
This will allow you diversify your income hence adjusting your cash flow and savings. With an increased income, you stand a better chance of saving up for your vacation or dream house.
Teenagers can be taught this too. They could get summer or part time jobs to save up for whatever they may want. They should see this as an alternative to augmenting their usual allowance and getting what they want without going for a loan.
Commit To Your Investment Plans
On the long run, all the yields from your savings should be channeled into your investment plan. Consider saving two hundred dollars a month for three to four years, you will get the amount needed for your dream car or house.
Saving up to get a home of your own is like a win-win thing. You will be leaving your rented home to your new home without any debts to pay off.
You could also invest in real estate, stocks, purchase of shares or any other profitable venture. Kids could see their purchase of that video game as a return for their commitment to their investment plan.
So, saving and investing is open to all ages. Commitment to your savings plan leads to a life of financial freedom and ease.