One way to accumulate assets for retirement, education, or other major goals is to reduce your spending. Studies have shown that these savings can add up over the years to a substantially increased nest egg.

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The familiar expression “A penny saved is a penny earned” overlooks the impact of taxes; a saved penny is, in fact, worth more, often much more, than an earned penny because you pay tax on an earned penny but not on the penny you save.

Thus, tax-free savings, with earnings compounding over the years, can really increase your nest egg, making it worthwhile to explore the following money-saving techniques.

This Financial Guide provides you with 10 tips for making sure that more of your money is slated for saving and investment. More important, it provides you with links to other Financial Guides that help you implement these tips and maximize the ultimate return.

1. Prepare a Financial Plan

While most people appreciate the importance of a financial plan, too many put it off to the tomorrow that never comes. It is important to identify your goals and determine how best to achieve them. A financial plan can help you do this.

Related Financial Guide: Please see the Financial Guide: YOUR FINANCIAL PLAN: Getting Started On A Secure Future.

2. Save Your Income

Use an automatic savings plan to make sure that you save a percentage of your paycheck every payroll period. The percentage should be determined by your financial planning needs. Some people need to save 10 percent of their gross pay while others need to save more. If the amount saved goes to a 401(k) plan or another tax-deferred plan, so much the better.

But don’t stop with automatic savings. Put aside everything you can. If you invest $50 a month in a mutual fund, you could have as much as $25,000 in ten years, depending on the rate of return.

A well-thought-out budget will help you determine how much you should and can save.

Related Financial Guide: Please see the Financial Guide: BUDGETING: How To Prepare A Workable Plan.

3. Cut Your Mortgage Costs

For most people, paying down a mortgage is an effective way of saving and increasing net worth. Decide that you will pay $100 or $200 per month or more in mortgage principal, and do it faithfully.

See if you can save money by refinancing your mortgage. Go through the calculations and see whether the reduction in your monthly payments would be worth the costs involved with refinancing. The general rule is that a reduction of at least two points will make it worthwhile to refinance if you intend to stay in the house for at least five years.

Related Financial Guide: Please see the Financial Guide: REFINANCING YOUR MORTGAGE: When And How Do It.

4. Cut Your Credit Card and Consumer Debt

To save interest, consider taking advantage of balance transfers, which offer a lower interest rate, typically zero percent (0%) for anyone with excellent credit and a stellar FICO score. You may have to pay a transaction fee of two to five percent (2-5%) on the amount transferred.

Related Financial Guide: Please see the Financial Guide: HOME EQUITY LOANS: How To Shop For The One That’s Best For You.

Once you have paid off a car loan or other debt, keep sending that payment to a mutual fund or other investment.

5. Cut Your Credit Card Costs

Cut your credit card fees and other costs by switching to a card that charges less interest or one that doesn’t charge an annual fee. Better yet, pay cash (or use a debit card) to pay for your purchases and avoid credit cards altogether.

Related Financial Guide: For suggestions as to other ways to cut credit card costs, please see the Financial Guide: CREDIT CARDS: How To Choose And Use Them Wisely.

6. Cut Your Bank Fees

There are several ways to reduce your bank fees. Find out what you need to do to get free checking and free ATM usage and do it. You may also want to join a credit union instead of using a bank since credit unions typically charge less for banking services. Here are a few more tips:

  • Keep a minimum balance in your account to avoid fees.
  • If you know you will be charged a fee for using another institution’s ATM, only use the ATM at your own bank.
  • Don’t keep too much money in a low-interest savings account. Find out how much money you’ll need access to in an emergency, typically three to six months’ worth of expenses depending on your personal financial situation, and keep only that amount in savings. The rest of your funds should be put to work. With interest rates so low, options include investing in stocks or mutual funds and parking your money in a long-term CD (check rates using
  • If you still write checks, avoid ordering them through your bank. Many check printers charge less for check orders than the printers used by banks

If you find you are withdrawing too much cash, stop using your ATM card and make yourself physically go to the bank to withdraw the money instead. This may help you to spend less cash.

Related Financial Guide: For suggestions as to other ways to cut bank fees, please see the Financial Guide: BANK ACCOUNTS: What To Look And Ask For.

7. Fine Tune Your Insurance Coverage

Here are some ways to save on insurance of all types:

Not everyone needs a life insurance policy, but if you think you need one, then it pays to shop around. If you already have a life insurance policy, then it’s a good idea to periodically make sure you are paying the lowest premium on your life insurance policy because rates change frequently. Also, if you’ve quit smoking, you may be entitled to better rates after a few years.

You may find that you are paying for too much coverage.

Related Financial Guide: For suggestions as to other ways to cut life insurance costs, please see the Financial Guide: LIFE INSURANCE: How Much And What Kind To Buy.

You should be able to get a break by doing this.

You may be able to get a lower rate form a competing insurer.

Related Financial Guide: For suggestions as to other ways to cut auto insurance costs, please see the Financial Guide: CAR INSURANCE: 10 Cost-Cutters To Save You Money.

Installing these types of safety devices usually helps you save on the cost of homeowner’s insurance. Don’t forget to ask your insurance agent about other savings.

Related Financial Guide: For suggestions as to other ways to cut home insurance costs, please see the Financial Guide: HOMEOWNERS’ INSURANCE: How To Get The Best Coverage And Value.

Once you have enough equity in the home, ask your lender to cancel your private mortgage insurance.

8. Cut Your Utility Costs

Your utility may have a program that subsidizes making your home more energy-efficient. Look into this possibility. Even if there is no help available from the utility, it is worth it to caulk your windows and make sure your insulation is a high enough “R” factor.

Here are some other ideas:

  • Use energy-efficient bulbs such as CFLs (compact fluorescent lights) and LEDs (light-emitting diodes) instead of incandescent bulbs. Doing so will save you about 25 to 30 percent. Another advantage is that these types of bulbs last longer.
  • Keep the thermostat set at the lowest comfortable temperature in winter and the highest comfortable temperature in summer.

9. Cut Your Phone Bills

Today’s cost-cutting competition among phone service providers offers many opportunities for savings on your phone bills, such as:

  • If you have a landline phone, make sure you’re paying as little as possible for long-distance charges. Take the time to investigate which long-distance carrier will save you the most, and switch to that carrier. Or, bundle your phone with cable and internet service.
  • Use e-mail, texting, or Zoom video to correspond with relatives and friends.

10. Forego One Big Expense per Year

For instance, skip your yearly vacation this year or take a less expensive one. Another way to save on a large yearly expense is to swap an expensive health club membership for a membership at the YMCA or shop around. Many fitness facilities offer special rates for new members. Paying one year or six months up front may also give you a break on costs.

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