I’ve been writing about saving money a lot in 2022, which means I’ve seen a lot of ways people are suggesting you should save money. Most of them were, quite frankly, tiring (yes, we all know we should make coffee at home instead of getting a pumpkin spice latte) and/or didn’t save you much money relative to the amount of time it took (sure, I can parse the circular for a Groceries for an hour to save $3, but my time is worth more than that). So if you’re in the camp to realign your financial goals and ultimately save more in 2023, here are 15 ways wealth managers and financial advisors recommend amassing some extra money:
1. Switch to a high-yield savings account – many pay more than they have since 2009
The pros say you need an emergency fund somewhere between 3-12 months worth of essential expenses. Good news on that front: Many high-yield online savings accounts pay out more than they have in over a decade. This interest, which can be around 4% and sometimes more, is basically free money added to your account.
By contrast, traditional savings accounts pay a whopping 0.19%. In a $50,000 savings account that pays 4%, the interest earned is about $2,000, versus $95 in a traditional account with a rate of 0.19%. Check out the highest savings account rates you can get right now here.
2. You can contribute more to your 401(k) this year – do it.
Individuals can contribute $22,500 to their 401(k) plans in 2023, up from $20,500 in 2022, and increase annual IRA contributions to $6,500. The pros say, if you can max them out, do it.
Even if you can’t hit the limit, at least get the match. “Make sure you contribute enough to your employer’s eligible retirement plan to receive the maximum matching contribution. Matched contributions are literally free money,” says Bradley Nelson, certified financial planner at Point Loma Advisors.
3. Consider I-Bonds.
“If you have extra savings beyond your emergency fund, it might be worth considering I-Bonds. These pay more than twice the highest bank interest rates, 6.89% versus current competitive bank rates of 3%,” says Autumn Campbell, planner Certified Finance Facet Wealth. While putting money into an emergency fund is a top priority, if you’re fully funded there, I-Bonds can be a wise way to save even more money.
4. Real estate equity has reached record levels. Get rid of private mortgage insurance (PMI) if you can.
“If you’re paying a PMI on your home because you have less than a 20% down, consider having your home appraised to see if the value has risen enough that your equity is over 20% down,” says Alexis Woodward of Blend Wealth. Your PMI payments will provide a nice amount of savings.
This is because homeownership is at a record high right now, which means that many homeowners will likely be able to get off the PMI. Freddie Mac estimates that most borrowers pay between $30 and $70 per month in PMI premiums for every $100,000 borrowed.
5. Choose Balance Transfer.
A number of credit cards now offer 0% interest for 18-21 months. “If you have recurring credit card debt, it might be worth considering a balance transfer. Ignore the points benefits if you’re focused on paying down debt. Reducing your interest can have a big impact on your reward schedule. Even if you don’t want to,” Campbell says. In doing so, “calling your existing credit card service and asking for a lower rate can reduce your current interest rate by a significant amount,” says Campbell.
6. Inflation is rampant. Don’t buy a car or take this trip, if you can help it.
Inflation has made some things more expensive — notably cars, travel, and food. While you should eat, you may not have to travel or buy that car. Overall, airfares increased 42.9% from September 2021 to September 2022, according to the US Bureau of Labor Statistics (BLS). Car and Driver reports that the average price of a vehicle topped $47,000 in December of last year, up from $40,000 the previous spring.
“If you’re considering buying a newer car, compare the cost of maintaining your current car for another year or two. Compare the ownership costs of luxury, performance, and SUV models with more economical alternatives. You probably enjoy adding more to your investment regularly than driving a top-of-the-line car,” says Nelson. the cost.
And, “With airfare, hotels, dining, and gas all costing more than in previous years, vacations are even more affordable. Consider traveling with friends and other families and splitting the cost of Airbnbs or cabins,” says certified financial planner Alexis Woodward at Blend Wealth.
7. Switch insurance providers.
Sure, it’s a hassle to negotiate everything from your car insurance to your homeowner’s insurance, but it can save you hundreds of dollars each year. You can also inquire with your current insurance company discounts Offered if you have a clean driving record, are interested in compiling car, home or rental policies, own multiple cars or have membership in certain groups such as teachers, military, alumni, and local organizations.
While you’re at it, consider this: “Switch to paying premiums every 6 to 12 months to lower the cost, but plan for a higher cost. Let’s say your car insurance is $100 a month, but you can switch to a $900 annual wage. What you need to do His do is save $900 divided by 12, which equals $75 in an account to cover annually. One small step can result in a cash flow return of a few hundred dollars,” says Woodward.
8. Control recurring expenses.
As MarketWatch Picks recently reported, when it comes to monthly costs for cell phone, Internet, movie-streaming apps, and more, Americans spent $213 per month in 2022, according to a report by C+R Research. So it’s time to take inventory of those expenses (come on, just look at your bank account or credit card reports from the past year and see what’s new) and cut out what you’re not using enough.
And if you have cable and a bunch of streaming options, consider this: “Do you really need all those channels,” says Nelson. “Maybe you can ditch cable TV altogether and meet your entertainment needs with select Internet streaming services. In some cases, this can lead to $100 per month or more for saving or investing.” Or, says Struthers, “use the ad version of streaming services.”
9. Try “stuffing cash”.
Set a cash budget and stick to it. Marketwatch picks He recently highlighted a TikTok trend known as cash-stuffing, which is basically a way to budget by spending the cash you set aside for various expenses.
“Most people who have cash budgets every month tend to stay within it. This doesn’t mean a minimum budget, but a realistic budget that meets your needs. There is a psychological effect to seeing your bank account go down, versus your credit card going up, which creates more money. The pain is when you swipe your debit card or cash leaves your hand,” says Sandra.
And while you’re at it, the “deals” are often fake. stop listening to that language; Do your homework first. Just because it’s cheap, doesn’t mean you need it. “Don’t buy something just because it’s a great deal. I once heard that ‘an elephant for a dime is a great deal,’ unless you don’t have a dime or don’t need an elephant,” says certified financial planner Steve Weiss at Buckingham Strategic Wealth.
In other words, really think about the cost of something. “Something at a good price might not be a good idea if it cuts significantly out of your budget,” says Weiss. Amazon, for example, changes the prices of things a lot. You can check how good the deal is at CamelCamelCamel. Google Shopping also allows consumers to track prices when they activate the price tracking switch on their Shopping tab.
10. Consider a Home Equity Line of Credit (HELOC).
“If you own a home that you value at more than 20% of its value, you may benefit from opening a HELOC. This can be used to take out some equity in the home and pay off other debt that has a higher interest rate. Not that this is not a proposition to take on more debt, but instead to rearrange the debt for your total cost,” says Campbell.
Currently, interest rates on 20-year HELOCs are around 7.78%, lower than many personal loans, some of which are as high as 36%. But, it is important to note that because you are offering your home as collateral when you get a HELOC, if you are unable to repay the loan, you risk losing your home. Over 10 years, a $50,000 HELOC at 7.78%, for a personal loan at 15% would save the borrower about $36,000. See the lowest HELOC prices you may get here.
11. Income is important to this equation, so keep that in mind.
It’s easier to save more when you earn more. “Negotiate a new salary or a new job,” says Struthers—if you can. And look at side gigs.
Or think of it like this: selling unused items. “If you have items at home that are still usable, such as clothing, appliances, baby items, tools, or art that you don’t use, it can be worth listing them on one of the many sites or social media platforms to recoup some of the cost and reuse that money for something else.” Another brings you more happiness,” says Campbell. Sites like TheRealReal, eBay, Poshmark, ThredUP, Tradesy, and more offer a variety of platforms where you can sell your used items.
12. Build a bond ladder.
“They build bond ladder For cash flow it can be Extremely An effective strategy,” says certified financial planner Mark Struthers at Sona Wealth Advisors. To build a 10-year Treasury ladder, for example, buy 10 bond ETFs, one for each year of maturity over the next decade.
13. Treat your reward the way you deserve it.
“When you get a bonus at work, immediately allocate a percentage to your IRA [or other retirement account]. It’s a bonus, treat it like that. “Rewards should never be part of your monthly expenses,” says Josh Chamberlain, certified financial planner at Chamberlain Financial Advisors.
14. Find out your hourly rates.
“When considering a non-essential purchase, translate the cost of the purchase into the number of hours you need to work to pay for it,” says R. Michael Parry, a certified financial planner with Liberty Wealth Advisors.
15. Use safer strategies.
Fraud costs money and time. Use credit cards, rather than debit cards, and use two-factor authentication when making purchases online to protect you from the cost and hassle of having to deal with online fraud. “Never automatically save your passwords on your phone or computer to bank accounts or credit card sites online,” Barry says.
The individual cost of traditional identity fraud was an average loss per victim $1,551 in 2021 and Experian It reveals that financial losses from fraud increased by 77% from 2021 to 2022, amounting to more than $6.1 billion.
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