Blog posted On June 27, 2018
Saving for a down payment is one of the biggest challenges first-time home buyers around the country face. Whether you are getting ready to buy a home, or saving for something else, everyone could use some fresh ideas to save more effectively. Lifestyle blog Refinery 29 partnered with Intuit, the maker of QuickBooks, Mint, and TurboTax, to compile this list of money-saving tips everyone can try.
Separate Checking and Savings Accounts
Opening separate checking and savings accounts is an easy first step to start putting money aside. While this may seem obvious to some, many Americans do not have separate checking and savings accounts. Some banks and credit unions have the option to link the accounts and automatically transfer a set amount of funds from checking to savings each month or pay period. To take it a step further, Refinery 29 suggests opening separate accounts for different goals and expenses, like rent, travel, and recreational activities. The accounts function like pre-paid debit cards. Find out about fees with your bank ahead of time before opening any new accounts.
Pay Down Student Loans
One of the most common debts Americans, especially Millennials and Generation Z, are carrying is student loan debt. After graduation, most student loans have a six-month grace period before payments are required. Making payments during this time will help reduce the cost of interest over the life of the loan. Paying more than the minimum payment is another way to reduce the lifetime cost of the loan. Consider refinancing options with a lower interest rate. While extra student loan payments now might seem like less money to save, it will pay off in the long run when you owe less interest over time.
Calculate Relevant Tax Deductions
With the growing popularity of the gig economy, many Americans are self-employed or working part-time in addition to full-time jobs to make ends meet. Not setting aside money for taxes when you are paid, could mean a $1,500 IRS bill come tax time. Meeting with a tax advisor or using a program to calculate taxes is one way to prepare for tax bills and make sure you are setting aside enough money to cover your bills.
Maximize Employer’s Match to 401(K)
The earlier you invest in retirement accounts, like a 401(K), the longer the money has time to grow. For example, money invested in your 20s will be worth more than money invested in your 40s. Financial advisors recommend upping your 401(K) contributions when you get a raise or a bonus. Many employers also match contributions to their employees’ 401(K)s, so maximize this opportunity when available.
Saving money, for a down payment, for retirement, or for another goal, does not happen overnight. Making simple budgeting changes is one way to ensure a sound financial future and achieve these goals.
Sources: Refinery 29