by Emily Hechler 
It’s easy to get caught up in the rush of everyday spending. The problem is that those small, impulsive purchases quietly drain the money you could be using to strengthen your financial future. Many people skip intentional saving and then wonder why their finances aren’t moving forward. The following long-term, low-risk saving strategies can help reverse that pattern.
Follow a Budget
When many think about following a budget, they imagine financial restriction. In reality, following a budget is just a plan that helps you spend an appropriate amount of money on what matters the most. When you create a budget, you can include your savings. This helps you ensure that you aren’t spending all the money you earn each month. Instead, you have money set aside to cover large expenses later.
Saving just for the sake of doing so isn’t motivating or sustainable. Break down your savings into goal-oriented accounts[KT2] , plus a general savings fund. You can add this detail to your budget if you find that it helps you stay on budget. I have been able to stick to my budget for five months in a row by doing this.
Reduce Your Debt
The more you pay in loan payments each month, the less you have to save. Some loans, like mortgages, are inevitable and require payments for decades. Other loans, like credit cards, auto loans, and personal loans, can be reduced faster if you create a plan to make it happen. Don’t feel like you need to pay off all your loans as quickly as possible. This can leave you struggling in an emergency situation.
If you want to pay off your debt fast, compare the debt snowball and debt avalanche methods to determine which option works best for your situation. Once you pay off your debt, you can start contributing this money toward your various savings accounts instead.
My husband and I are currently paying off a personal loan and a student loan. After we finish paying off our personal loan in December, we’re going to contribute the “extra money” toward the student loan to reduce our debt even faster. This will cause us to save money in the long run by not paying as much in interest fees.
Invest Your Money
Plan ahead so you can retire without worrying about your finances. A great rule of thumb is to contribute 15% of your pre-tax income toward retirement savings. This can seem like a large amount. That’s because it is. If you aren’t able to save 15% right now, that’s okay. Open a retirement account and regularly contribute what you can.
The earlier you start contributing to your retirement account, the more potential you have to earn compound interest and have more in your savings at the beginning of your retirement. According to John Hancock, if you invest $250 a month into a retirement account with an annual return of 8% starting at age 35, you’ll have $375,073 accumulated. If you start at age 45, you’ll have $148,236 accumulated. In the years between ages 35 and 45, the reader invested $30,000 more but has over $228,000 more saved for retirement. This is the power of compounding interest.
Many accounts allow you to automatically transfer money into your retirement account with your paycheck’s direct deposit. Some employers also match what you contribute to a certain amount too. You can also open an IRA with Alltru independent of your employer to supplement your retirement savings.
Open a CD
Certificates of Deposit (CD) range from three months to five years. When you open a CD, you lock in your interest rate. No matter the status of the economy, your account will continue to grow at the original rate for the full term. Once your CD reaches maturity, you can open another CD to keep saving more. CDs are low-risk ways to diversify your investments for a well-rounded portfolio.
A Certificate of Deposit is a great product for those who want to earn a high interest rate and can guarantee that they won’t need to touch the funds during their term. Some examples include parents saving for an upcoming child’s wedding and those saving in the short- to mid-term. To make a CD a more effective long-term product, let your CD automatically renew for another term.
Sign Up for Life Insurance
Many life insurance plans only cost a few dollars a month but provide your loved ones with the funds they need to honor your life without financial strain. Alltru members can get accessible term and whole life insurance for a low cost with TruStage. While these funds aren’t fun to plan for, your beneficiaries can be relieved of a personal financial burden thanks to your plan.
Term life insurance covers your family if you pass away within a certain time period. Whole life insurance covers your family no matter when you pass away.
Which Strategy Will You Use?
These five strategies are effective on their own, but combining makes them even more powerful. The key to saving long-term is consistency. When saving becomes automatic, planning for the future stops feeling overwhelming and starts becoming achievable.
