As you celebrate freedom this 4th of July, why not spend some time thinking about one day becoming more financially free?
Here are a few things you should consider doing now.
Save money automatically
Research shows that the less effort it takes to save, the more likely you are to contribute to savings. Make it easy on yourself and automate your finances.
Having money taken straight from your paycheck and deposited directly into your savings or retirement account is a critical — yet easy — money habit that boosts wealth. Plus, when you pay yourself first, you don’t see the money, so you’re not going miss it. You’ll avoid the mistake so many of us make when we pay ourselves last (after we’ve paid for everything from housing to utilities to groceries): there’s often nothing left over.
Round up your mortgage payments
If you’ve already refinanced or don’t qualify for a refinance, you may be wondering what else you can do to save on your mortgage payment, which is likely your biggest household expense. Have you considered rounding up your payments? Every little bit helps.
For example, say you have a monthly mortgage payment of $954.83. If you round up your payments to $1,000 by putting in an extra $45.17, you’ll pay off your debt two years and five months early. For further inspiration, run your own numbers using a mortgage calculator.
Budget, budget, budget
If you consistently spend more than you earn, the reality is that you’re going to accumulate more and more debt. Don’t live on the edge like this. You’ll be in deep — in no time.
Establish a budgeting system that works for you, whether that’s pen and paper, a computer program, a website, or an app like Mint.
Personalize your accounts
Some banks let you set up sub-accounts and designate them by name, such as “new laptop,” “wedding dress,” or “summer home.”
Consider doing this. Research shows that those who label their savings accounts put away 31 percent more money than those who don’t, in part because the name reminds you what you’re saving for. It makes it real.
Focus on the future
Many Americans think only about the here and now. For example, if they’re paying their bills and there’s food on the table and gas in the car, they feel they’re doing okay.
But you’ve got to think ahead, and connect your future aspirations with your present self. Why? Because research shows that when you do this, you’re more inclined to save money. Seeing an image of yourself in old age can make you better at saving (try an app like AgingBooth). So can leaving out photos of your goal – whether it’s a picture of your dream home or a hammock on the beach for your ultimate retirement spot. Visuals serve as reminders that the future is coming, and you’d better start planning for it — now.
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