Have you ever felt the pressure to find another side job just to make payments? Have ever felt stuck in a quandary to make more just to pay those dreaded monthly bills and still not having enough to save for the future? We all have; but those of us who are working find it difficult to allocate time for the extra work; time restraints our ability to work more for the extra income. But, what if you can learn some simple ways to saving money— to invest— for the retirement?
Have you ever thought that money can be made simply by saving what we have? In deed, every dollar saved is more than a dollar made considering the fact that we pay uncle Sam on every dollar that we make. We seldom review our expenses, especially big expenses, to realize that being frugal with what we spend can generate extra cash that we can save and grow for the future retirement. We pay attention to what we make but we seldom pay attention to what we spend.
Never buy a permanent or universal life insurance policy.
If you have life insurance policy then one of the simplest ways to saving money is to find out if you need life insurance policy. If you are young then you do need life insurance as you have a growing family but if you are in your senior years then, most likely, your kids have grown and you have saved enough for the retirement; so you don’t need life insurance. Even if you need life insurance – remember that life insurance is to protect those who depend on you in case if you die. Permanent life insurance or universal life insurance has cash value which is a tax deferred savings plan. Never buy any permanent life insurance as if you die, your family will only receive death benefit and not the cash value. Insurance agents make huge commission on universal life — as much as eight times more than term life — so they stress on the fact that you are saving for the retirement with the cash value. Baloney. You are not buying life insurance to save for the retirement. Instead, buy term insurance and the premium difference you save can be invested into a growth, income or growth and income mutual fund.
Never buy extended warranties on anything you buy.
Extended warranty is a booming industry as these businesses are making 40-80% profit margin. Most of what you buy has manufacturers’ warranty so the extended warranty won’t even cover the first year of the warranty period in most instances. But the most astounding aspect of these warranties is the fact that, according to Federal Trade Commission, extended warranties are not even warranties; they are simply considered service contracts. Another reason not to buy extended warranty is the fact that in the event of a breakdown, the warranty company— not the consumer— decides who does the repair. No wonder that when a cashier gets trained to ask you for another warranty sale, retailer gets handsomely rewarded for that warranty sale at consumers’ expense.
Never buy a new car.
Besides house mortgage, car payment comes next in terms of dollars that an average household spends on a monthly basis. Most cars— no matter what brand— goes down 30-40% in value in the first few years; so, a frugal freak always buys a car few years old. Normally, car has low mileage if it is less than few years old.
These three simple ways to saving money can help fund your retirement savings without requiring you to look for another job on the side to make payments. I always believe that frugality is core to a happy, fulfilling life as it not only finds ways to save money by reducing unnecessary expenses but also time by not forcing us to make more just to pay for those precious unwanted possessions.