You may be doing all the right things when it comes to your savings — putting money aside from every paycheck, contributing to your employer’s retirement plan and diversifying your investments. But if you are concerned that these things might not be enough or your goals are bigger than that, here are some money moves you may not have thought of that could turbocharge your finances and set you up with financial security for life.
There are two ways to increase your nest egg: Save more and make those savings work harder for you. These ideas will help you do both because it’s important to know how to save and how to invest what you’ve saved.
Last Updated: October 31st, 2022.
Make Your Savings Very Hard To Get At
One of the keys to growing your savings is to keep the money in an interest-bearing account, and don’t touch it. Open a separate savings account at a bank you don’t typically use. An internet bank can be good for this purpose since you won’t be able to walk into a branch and take out the money.
Don’t link your debit card to your savings account. When you want to deposit money, you can use mobile upload if available, mail in a check or go to a branch if it’s not an internet-only bank.
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Use Your Credit Card
This may seem like odd advice. After all, credit card debt is the biggest threat to financial security, right? Well, it can be. But credit card debt is different from credit card use. If you use your credit card for regular purchases and pay the balance off at the end of the month, it can actually help you save more.
First, you’ll need a credit card that pays you cash back. Then, you’ll need to use your card for groceries, gas and even monthly utility bills. And then — this is the most important step — you need to pay off your entire credit card balance before the due date. This way, you’ll get cash back for what you’ve spent, but you won’t pay any interest on your purchases. Now, the next most important step is to put the money you earned through cash back into your savings account. Don’t let it sit there just to add up or to use it for next month’s balance. Put it into savings.
Take Advantage of Credit Card Rewards
Some credit cards offer travel rewards and other perks in addition to or in lieu of cash back. If you have a travel rewards card, make sure you cash in on the rewards the next time you plan a trip to save on out-of-pocket costs.
Diversify Your Savings
You don’t have to put all your money in a savings account. Diversifying your savings strategy to include a mix of savings accounts, CDs and money market accounts can ensure that you are earning interest while still being able to access funds if and when you need to.
Invest In Real Estate
If you own your home, you’re already a real estate investor. But there are many other ways to make money from real estate. You can buy, fix and sell properties as they do on different fixer-upper shows on television. You could buy a multifamily property and earn rental income. Or you could invest in a real estate investment trust, or REIT, which sells shares of a portfolio of properties like shopping malls, apartment buildings and other properties.
Look At Where You Live
Where you live has a significant impact on your expenses. If you can move to a location where housing and other costs are lower, you will be able to put more money into savings every month. While this is a somewhat drastic change for many people, it’s certainly one to consider if you’re serious about setting yourself up for a solid financial future.
Avoid Paying Banking Fees
Even if you earn a good rate of interest on your savings, it won’t do you any good if you lose some of that money to fees. If you put your money in a savings account or CD, make sure there is no transaction fee or other potential fees. Some savings accounts will charge you if you make too many — or too few — transactions during each statement period. And with CDs, you can face early withdrawal penalty fees.
Control Your Debt
If your goal is financial security, debt has no place in your plan. A mortgage, car payment and student loans may be somewhat unavoidable parts of life, but controlling the amount you pay for those loans can help you on your way to financial security.
Keep an eye on interest rates so you’ll know when it makes sense to refinance your mortgage or student loans. When your car loan is paid off, keep that car for another few years. Take the amount you were paying on your loan and deposit it into your savings account every month.
Automate Your Savings
Have a portion of every paycheck automatically transferred to your savings account. This way, you’re saving without thinking about it. When all of your paycheck stays in your checking account, you’re more likely to spend it all.
Build an Emergency Fund
You should have three to six months of expenses saved in an emergency fund so that you’ll be financially prepared in the case of job loss or a major unexpected expense like a home repair or medical emergency. Having an emergency fund will prevent you from needing to rely on credit or a loan to cover these unforeseen events.
Create a Monthly Budget
Create a budget that includes necessary expenses, wants and savings. The amount you dedicate to each is up to you, but once you set a budget, you should actually stick to it.
Save as Much as You Splurge
It’s fine to spend on the occasional “want,” but each time you do, put the same amount into savings. For example, if you spend $100 on a pair of shoes, put another $100 into your savings account. If you can’t afford to save as much as your splurge costs, skip the splurge.
Don’t Overspend on Your Home and Car
Home and auto purchases can take a large bite out of your budget. Try to keep these costs down as much as you can. For example, buying a used car will save you in the long run compared to leasing a brand new car.
Renegotiate Your Cable and Phone Bills
If you’ve stuck with the same cable or wireless service provider for years, chances are your bill has been rising incrementally without you even realizing it. Every year or two, check in with your providers to see if they have new promotions that can lower your bills.
Or Cut the Cable Cord Altogether
Not only will cutting the cable cord save you money, but it will also save you time that you can now use to make more money or strategize about additional ways to save money.
Shop Around for Insurance
Insurance is another monthly expense that you might be able to lower by switching providers. Use a comparison tool to see if there is a home or auto insurance provider that would give you a lower rate than what you are currently paying.
Follow the 24-Hour Rule
Before making any unnecessary purchase, wait 24 hours before buying. You might find that you wanted the item in the moment, but that it’s not something you actually want to spend money on when you give yourself extra time to think about it.
Enact a Weekly ‘No Spend’ Day
Choose one day a week to not spend any money. This will require some planning ahead, but it’s definitely possible to do.
Set Up a Passive Income Stream
The best type of money is the kind that makes itself. Earning passive income usually requires an initial investment that can pay for itself over time. This can include buying an ATM or billboard or buying an already profitable website.
Take Advantage of Your 401(k) Match
If your employer offers a matching contribution to your 401(k) retirement plan, make sure you are taking it. This automatically doubles the investment you make toward your retirement.
Continually Increase Your Retirement Contributions
As you earn more and/or pay off more debt, you should be increasing the percentage you save for retirement.
Regularly Rebalance Your 401(k)
Check your 401(k) regularly to ensure your portfolio matches your risk tolerance. Generally, you should decrease the risk as you get closer to retirement.
Ask For a Raise
If it’s been a while since your paycheck got a boost, don’t be afraid to ask for the money you deserve. This is especially true if you’re outperforming your goals or if your scope of responsibility has expanded since your last pay bump.
Delay Claiming Social Security Benefits
The full retirement age is between 65 and 67, depending on the year you were born, but you can begin claiming benefits as early as 62. However, if you claim your benefits early, the amount will be reduced. Conversely, for every year past your full retirement age that you postpone collecting benefits (up to age 70), the amount of your benefit will increase.
Improve Your Credit Score
If your credit score is low, make moves to improve your score so that you qualify for lower interest rates. Having a high credit score can also give you an advantage if you are applying to rent an apartment or get a new job. Some ways to improve your credit score include paying bills on time, becoming an authorized user on a card held by someone with good credit and keeping unused credit lines open to lower your credit utilization.
Save For College
Just like you can contribute to an HSA to pay for future medical expenses, you can contribute to a 529 plan to pay for future college expenses. Contributing to this tax-advantaged plan now can help you be financially prepared to help your kids pay for college down the line.
But Prioritize Saving For Retirement Over Paying For Your Kids’ College
As a parent, you likely want to give your kids all the help you can when it comes to paying for college. However, you shouldn’t reduce your retirement contributions — or worse, dip into your retirement savings — to do so. Remember, your child can take out loans to pay for college, but you cannot take out loans to fund your retirement.
Buy Used or Refurbished Items
Whether you’re shopping for furniture, clothes or tech, you’ll often save big by purchasing used or refurbished items.
Shop Through Cash-Back Sites
Sites like Rakuten and Coupon Cactus allow you to earn cash back on purchases at a number of popular retailers when you shop through their portals. This can be particularly useful if you are making a major purchase online. You can even shop with a cash-back credit card so you earn extra cash back.
Setting Yourself Up for Financial Security
As with your other financial decisions, you’ll want to do your research before deciding to implement any of these money moves. Be sure to create a budget for your expenses and see how much you can save and invest each month. And if you decide to commit to setting yourself up for life financially, these tips can help you get on your way.
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Karen Doyle contributed to the reporting for this article.