Ways to Save

It may be very difficult to know off-hand how to save money. Here are some ideas to help you put away some cash and save in the long run.

1. Take part in a work-related retirement program. Most employees reject free money from their employer by not joining a retirement program at work, such as a 401(k) plan. When you participate in this type of plan, with a dollar-for-dollar match, you could receive an annual yield of greater than 100% o­n your investment.
2. Remember to save monthly through an automatic transfer from checking to a savings account outside of work. These savings will help fund emergencies, home purchases, school tuition, or maybe retirement. Nearly all banks will, o­n request, automatically transfer funds monthly from your checking account to a savings account, U.S. Savings Bond, or stock mutual fund. You will probably not miss this money, since you won’t see it in your checking.
3. Pay off high-cost debt first. The best investment most borrowers can make is to first pay off debt with double-digit interest rates. For instance, if you have a $3,000 credit card balance at 19.8%, and you pay the required minimum balance of 2% of the balance or $15, whichever is higher, it will take you 39 years to pay off the loan. Make sure to pay much more than the minimum payment so that you can pay it off faster.
4. Purchase a home and pay off the mortgage before retiring. The largest asset for most middle-class families is their home equity. o­nce your family makes its last mortgage payment, you have much lower living expenses. In addition, you have an asset that can be borrowed o­n in emergencies or change into cash when selling your home.
5. Earn up to 4% in interest or more o­n CDs or U.S. savings bonds. Many CDs from a bank or credit union presently pay between 3% and 4%. If you have a 4% yield, your money will double in 18 years.