How to Become a Millionaire Investing Just $200 per Month

how to become a millionaire

How to Become a Millionaire

In this article I am going to explain how to become a millionaire in 9 simple steps! Read on to find out how!

 

Tip: Save the image above to Pinterest so that you can easily find this article on how to become a millionaire with just $200 a month later!

 

How to Become a Millionaire with Just $200 a Month!

That magical number—$1 million. Even though a million dollars isn’t what it used to be, having a million dollar net worth will still allow you to live a comfortable (and awesome!) retirement.

And, sadly, it is still something most Americans won’t attain. But you can do it; it’s really not hard! It takes a little bit of discipline and dedication, but all it takes is $200 a month! And saving $200 a month is very doable for most families if they make it a priority.

So how does $200 a month become $1 million for retirement? The answer is compound interest. Albert Einstein called compound interest the eighth wonder of the world. When I first learned about the amazing power of compound interest in an extracurricular class I took with my husband while he was in college, I got hooked on personal finance.

I then began a serious study of personal finance, and it’s something I’m still passionate about, more than a decade later. Even if math isn’t your favorite or your best subject, like it wasn’t for me, you can still rock your personal finances. And I’m here to help you do it.

 

Practical Advice for How to Become a Millionaire

In a later section in this article I give very concrete, practical, simple steps you can take to have the money available that you need (as little as $200 a month!) to become a millionaire.

But before I talk about those steps to become a millionaire, though, I want to mention some other habits that are essential for those on the path to becoming millionaires.

 

1. Decide to spend and save intentionally.

In order to become a millionaire, you have to have a little bit of money to invest.

It does not take a ton of money to become a millionaire when you invest regularly over the long term (as you will see below). But you do have to be intentional with your money in order to have some money to invest.

 

2. Start from a solid foundation.

Before you begin investing, you should have some money set aside for the inevitable financial setbacks that happen in life.

The reasons are pretty simple. If you do not have an emergency fund, when something bad happens (and it really is a matter of when, not just if), then you will have to stop investing to take care of the emergency—or worse yet, you might even feel tempted to pull money from your 401(k) or other retirement or investment accounts to take care of the emergency.

And that is something that you definitely do not want to do! So before you begin investing for retirement, start with a solid foundation. And part of that solid foundation is to have an adequate emergency fund.

Before beginning to invest, you really should have an adequate emergency fund. (That simply means that you have money saved in a separate savings account that is designated for emergencies only.)

A great place to park your emergency fund is with CIT Bank, which offers one of the best savings interest rates around. And right now, you can earn up to $300 when you open a Savings Builder account! Learn more or open your CIT Bank Savings Builder account here.

Learn how to build an emergency fund.

Tired of tiny interest rates on your savings?

Are you tired of tiny interest rates? Do you want a solid bank with a long history (one that has been around for over 100 years) who is focused on their customers and not just their bottom line?

Then you should check out CIT Bank. We love our CIT savings account, which offers the highest savings rate that we know of. With the CIT Bank Savings Builder, you can earn up to 1.75% on your savings account (which is really good in today’s market)! It is a great place to put your emegency fund and other savings.

And right now you can get up to $300 when you open a Savings Builder account! Click here to learn more and open your savings account today!

3. Create a spending plan.

In order to spend and save intentionally, you have to have a spending plan (aka, a budget).

If you want any money available to save and invest, that means that you cannot spend it all on living expenses. And that is where a budget comes in.

Even though a budget might seem restrictive, once you start doing it, you will actually feel like you got a raise! And that is because you will start finding places in your budget where you can reduce your spending.

Having a spending (and saving and investing) plan really is the only way to win with your money and build wealth over time.

You can find the complete beginners guide to budgeting here.

 

4. Begin looking for ways to reduce your spending.

As you begin to budget, you will find places where you can cut your spending. I will talk in much more detail below about 9 areas where you can reduce your spending in order to find the $200 a month you need to invest to become a millionaire, but here are a few quick ideas to start you thinking about it:

  • Think of ways you can cut your grocery spending.
  • Reduce the amount you spend eating out.
  • Spend less on entertainment.
  • Find ways to reduce your transportation costs.
  • Slash your utility bill.
  • Cut your housing expenses.

 

5. Find ways to increase your income.

Finding ways to reduce your spending in order to have money to invest is powerful, but finding ways to increase your income is potentially even more powerful!

And the reason is simple: there is only so much that you can do to cut your spending, but your ability to increase your income is nearly limitless!

For example, you could work to get a promotion or a raise.

You could start an awesome side hustle such as blogging to earn extra money on your own terms. Learn how I make $1,500–$2,000 a month as a newer blogger with these different ways that bloggers make money (and there are many, many other bloggers who make $10,000+ a month working part time or full time from home).

You could get a second job or work overtime.

For even more ideas, check out these awesome ideas for how to make more money

 

6. Start investing as soon as you can.

I will discuss this in greater detail below, as well, but because of the amazing power of compound interest, the sooner you can get your emergency fund in place and begin budgeting and reducing your expenses to have money available to invest, the better.

Why Become a Millionaire?

As I said above, even though a million dollars is definitely not worth what it was 50 years ago, it is definitely enough to provide a comfortable lifestyle in retirement if you spend that money wisely.

And fortunately, because of the many ways that you can make money today, becoming a millionaire has likely never been easier than it is today. For example, there are many side hustles that you can do from home that can give you a great additional income that you could use to invest potentially even more money toward your awesome retirement.

Interested in starting an awesome side hustle that you can do from home to make a great part-time or full-time income doing something that you love and working for yourself on your own schedule? Learn more about how to make money blogging here.

 

Tip: Learn more about how to save for retiremnt here.

By having retirement savings of at least $1 million, you can open up a lot of opportuntunities that you otherwise would not have.

With $1 million or more, you can definitely have financial freedom. You will not have to work into your 70s. You will be able to do some travel and give to worthy causes and pursue other hobbies and pastimes. Depending on the type of lifestyle you want to have and where you choose to live, you may even be able to retire early or semi-retire early if you choose to.

No matter what it is that you are passionate about and what you want to accomplish in life, your path to get there will be easier if you have prepared well financially by setting and working toward those goals. You can learn more about how to reach large financial goals here.

How $200 a Month Becomes $1 Million

It definitely is realistic to become a millionaire by investing just $200 a month! If you graduate from high school or college and begin investing $200 a month by age 25 and work until age 65, and you earn a 10 percent average annual rate of return (very doable over the long-term with good growth stock mutual funds), then you would retire with $1,168,444.

If you are reading this article a little late in the game and you are already 30, you can still easily become a millionaire by retirement! If you saved $200 a month from age 30 to age 67 and earned an 11 percent average annual rate of return, still very doable with good growth stock mutual funds over the long term, you would have $1,126,825!

Don’t want to work till you are 67? No worries! Just up your monthly retirement contribution to $250, assuming you earn an 11 percent average annual rate of return, and you can still retire at at 65 (if you started investing at age 30) with $1,137,492!

And what if you are starting even a little bit later in life than that? You can still become a millionaire with just $200 a month! By saving $200 a month from age 35 to age 69, if you earn a 12 percent average annual rate of return, still realistic over the long term with good growth stock mutual funds, you would have $1,033,592! 

And again, if you don’t want to work till age 69 but want to retire at age 65, then up your monthly retirement contribution to $310, and if you earn an average annual rate of return of 12 percent, then you would have $1,0005,488 at retirement! Or if you like to stick with round numbers, if you contributed $300 a month from age 35 to age 65 and earned an average annual rate of return of 12 percent, you would have $973,053!

So don’t give up on the awesome goal to become a millionaire by retirement! Becoming a millionaire is a great goal to help ensure you reach financial freedom later in life! And if you make those monthly contributions into a Roth 401(k) or Roth IRA, then all of that money will be tax free when you withdraw it too! That means no paying Uncle Sam again in retirement. Woo hoo!

Note: Are you new to investing and want to know how to start saving for retirement? Do you want to know, generally, what kinds of retirement plans to invest in, how much to invest, what types of investments I would recommend for retirement, and more? Then check out this article with 5 simple steps to start investing for retirement.  

Check out these related articles:

How to Invest Your $200 a Month to Become a Millionaire

If you have a company 401(k) or other retirement plan where you receive a match, take advantage of it, and invest at least enough money to receive the full match in your company plan. If you don’t receive a company match, then you will probably be better off investing in a Roth IRA than investing in your company 401(k) because you will generally have many more options in an IRA. (And with many more options you are likely to find mutual funds that offer a track record of better long-term rates of return.)

To help you adequately diversify your retirement account, I recommend spreading your investing equally among four categories: large cap (large company), mid cap (mid-sized company), small cap (small company), and international mutual funds.

We have investment accounts through both Schwab and Vanguard, and they are both good brokerage companies. My Roth IRA is with Schwab, and personally I prefer them over Vanguard. Fidelity is another good option.

If you would like to know how we choose the mutual funds that we invest in, fill out the information below, and I’ll be happy to send you the information. No strings attached, and I don’t sell anything related to stocks or make any money off of sending you this information. It’s just the kind of thing I really wish I would have known 15 years ago when we started investing for retirement.

how to become a millionaire

Ways to Save $200 a Month to Become a Millionaire

In order to find $200 a month in your budget, see if you can reduce your spending or save more money in one or more of the following areas.

1. Cut back on eating out to help you become a millionaire.

The average American family spends about $3,000 a year on eating out. Even though you’ll have to replace some of that cost with the cost of buying groceries to eat at home, the savings here can be amazing. (To learn how to save money on your grocery shopping, read this article with more than 70 tips for slashing your grocery spending.)

For more than 10 years we’ve spent less than $300 a year on eating out for our family, and I know that that has been part of the reason that we’ve been able to reach other financial goals that we’ve set. Read this article to learn how we save money eating out (when we do eat out :)).

2. Slash your grocery budget.

The grocery budget is one of the areas where most people can save a lot of money if they choose to because there are so many options involved and because the difference between what is expensive and what is cheap is so drastic sometimes.

For example, the local discount store where we buy most of our groceries regularly sells frozen boneless skinless chicken breasts for $1 a pound. And yet you can also easily spend $5 to $10 a pound or more on expensive cuts of meat. The same goes for produce in season versus produce that is not in season. People spend a lot of money (a lot of money) on junk food and soda and alcohol and other nonessential items; that’s another area where you can likely trim substantially.

This article shares more than 70 ideas for reducing your grocery spending.

One of the best ways that I have found to save money shopping and grocery shopping in particular is to comparison shop. Grab your free grocery price comparison cheat sheet to help you slash your own grocery budget!

You can also save a ton of money by meal planning effectively! Sign up below to receive the free weekly meal planning sheet to help you save time and money with your grocery shopping and meal planning!

3. Cut your cable or satellite.

There are a lot of free or cheaper alternatives to cable and satellite, so try pulling the plug on these services and banking the savings. The average cost of paid TV in the U.S. is close to $70 a month, so if you will cut your cable or satellite and invest the money each month instead, you will be one-third of the way to saving your $200 a month to become a millionaire right there!

With digital TV through a standard antenna, there are many channels available just on your regular TV—for free. If you haven’t checked them out for a long time, you should. And if you can be a little patient, the library also carries many of the programs and movies you regularly watch, for free. But if neither of those options works for you, you can try Netflix, Hulu, Sling, or other similar options.

4. Save money on other entertainment to help you become a millionaire.

Another area where you can reduce your spending is with entertainment. To save money on entertainment, find things to do with your spouse or family that are free or cheap. There are so many fun activities that you can do for little or no money that reducing spending in this area really isn’t very hard. Check out this huge list of over 90 free activities you can do with your family.

As part of saving money on your entertainment, don’t forget to take a look at the money you spend monthly for your cell phone plan. The average family in the U.S. spends over $1,000 a year (about $90 a month) on their cell phone bill. But you can save a considerable amount if you’re willing to reduce the amount of data you use (or research new data plans with your carrier in case prices have dropped) or switch carriers.

Since September 2018, we’ve been using Xfinity Mobile for our cell phone carrier! If you’re in an area with Xfinity high-speed internet and mobile, you’ve got to check them out! We’re paying an introductory price of $40 per month for our internet (same price as the much slower internet that we used to have from a different provider; it is then set to go to $65 a month, but you can bet we’re going to try to negotiate that down!), and the cell phone plan is virtually free.

Since we’re such light data users (especially given the fact that Xfinity Mobile has free hotspots it seems almost everywhere!), we pay only $3.16 a month for taxes and fees for each smartphone line. (That’s the price if you use less than 100 MB of data per month, which we do; then it’s $12 per GB per month after that, or $45 per month for unlimited.) It’s such an awesome deal!

And Xfinity Mobile has the same coverage as Verizon, which reportedly has the best cell phone coverage in the U.S. You do need to sign up for Xfinity internet in order to use Xfinity Mobile, at least initially. You can then drop the internet service if you want, but then you’ll pay an extra $10 per month per line for the mobile service. Interested in learning more or signing up? Use this referral code to save up to $100 when you sign up: 1RQ4SP

Don’t have Xfinity in your area? Before Xfinity we were with Republic Wireless for over two years. They were a great company, and they are so much cheaper than having service with one of the Big Four cell phone carriers. I spent about $13 a month for my smartphone data plan. Isn’t that amazing? Check out their website to learn about their plans and pricing, and start saving today!

If you use more that 1 or 2 GBs of data, also consider Mint Mobile, which offers plans starting with 2 GB of 4G data and then unlimited LTE data for just $15 per month. That’s an incredible deal. Visit their website to learn more.

Also find ways you can save money on your current cell phone plan with these ideas to slash your cell phone bill here.

Read this article for even more ideas on how you can spend less on entertainment in various areas to help you become a millionaire.

 

5. Save money on vacation.

To save money when vacationing, try going on a staycation, where you vacation at or near your home. No matter where you live, you can still find tons of fun things to do in your own backyard! Chances are there are tons of things that travelers come to your area to do that you have never done—so check them out!

Read this article to find more than 50 awesome ideas for things to do during a staycation!

You can also save money by staying at people’s homes through Airbnb and by staying in hostels. And by camping.

We’ve been staying at places through Airbnb for the last couple of years, and it’s been great. It’s how we’ve done most of our vacationing during that time—even more than camping. I love using Airbnb because the hosts are wonderful and the price is awesome. And so are the amenities (my favorite places are those with pools and hot tubs :)). Read five awesome ways that you can save money by using Airbnb here.

Sign up now for an Airbnb account and receive $40 to use toward your first stay. Pretty sweet!

 

You can also find many ideas for ways to save money on your family vacations here.

 

Check out these related articles:

6. Get rid of your car payment to really make progress on becoming a millionaire.

The best make and model of car to own is the one that doesn’t have any payments. 🙂 Of course for the longer-term you want something that is reasonably safe and reasonably comfortable and that you don’t have to worry too much about breaking down on you.

But for the shorter-term, if you have car payments on a vehicle and it’s squeezing your budget and you can’t increase your income soon, you should look at selling it. Especially if you won’t likely be able to pay off the car in the next 18 to 24 months at the most, I would strongly encourage you to sell the vehicle.

Even if that means selling the car at a little bit of a loss (when you’re upside down on it) and taking out a small loan for the difference if needed, I would encourage you to do it. And then sell some stuff or work extra or even borrow a little extra money from your credit union or local small bank to be able to buy a $1,000 to $3,000 car that you can get around in for a while till you can save up money to buy a more expensive vehicle.

Because having $3,000 to $5,000 of debt on a personal loan and inexpensive car is a better option than keeping a large debt on your current automobile. And then you can save up and buy a vehicle you can afford—with cash! Learn how to buy a (nice) car with cash here.

If you will commit to buy cars with cash from now on and invest some of the money you were spending on car payments in your own awesome financial future instead, you will be well on your way to retiring with dignity and comfort. Let’s work on building your wealth instead of the bank’s, shall we? 🙂

Learn how to get (and stay!) out of debt here.

 

7. Find other ways to save money on transportation.

You can also save money on transportation by driving less through carpooling or biking or telecommuting, saving money on gas with apps like GasBuddy, saving money on car maintenance and car repairs, driving the speed limit :), finding cheaper auto insurance or saving money on your current auto insurance by taking advantage of discounts, and more. Find more than 30 ideas on how to save money on transportation here.

 

More money-saving tips: Do you want even more ideas on how to reduce your spending in order to find your $200 a month to invest? You can find ways to save money on housing, save money on utilities, and save money on clothing.

Also read this article that has more than 20 ideas for ways to reduce your spending in nearly every budget category.

 

8. Increase your income to help you become a millionaire.

Even though I spend a lot of time teaching people how to spend less money, and I honestly feel that learning to control your spending is the more important of the two factors when it comes to gaining financial stability and building wealth, I feel that earning more income has the greatest potential impact. And let’s be honest—it’s just more interesting and more fun. Because there are only so many things that you can do to reduce your spending (but check out this article to learn more than 20 ways to reduce your spending), but the opportunities to increase your income are nearly limitless!

You can potentially increase your income in many ways, from seeking a raise or promotion at your current job to starting your own business to getting a second job or finding a side hustle to starting a profitable podcast or YouTube channel or starting a money-making blog! 🙂

You can learn awesome, realistic tips for how to increase your income here.

If you are ready to earn more money (and who isn’t?!), then sign up for my free 10-day Earn More Money, Change Your Life challenge below.

 

9. Automate your investing.

Automating your investing for retirement will help ensure you reach your financial goals. This is so important! So just do it! If you have a 401(k), make sure you have a percentage of your income at least equal to the company match automatically withdrawn from the paycheck and invest in your 401(k). If you don’t have a 401(k) available, then open and set up automatic investing for your IRA through a brokerage company such as Schwab.

When you automate your finances it not only saves time but makes life much simpler—and it ensures that you stick to your financial goals! To learn more about how to automate your finances to simplify your life and start to build wealth, I recommend The Automatic Millionaire by David Bach. It’s one of my favorite personal finance books because it gives simple, actionable steps you can follow.

Learn how to automate your finances to build wealth.

 

 

Conclusion

With these 9 simple steps not only do you know how to become a millionaire, but if you follow them, you really will become a millionaire! It really will be your financial future!

When you think about it, it’s pretty amazing that for less money than most American households spend on eating out each month, you can set yourself up to be a millionaire, to be financially stable and live comfortably throughout your retirement! The fact that you can retire in comfort for $200 a month is really pretty incredible. So get started today!

To learn more about how to become a millionaire by investing for retirement, read this article.

Want to Track Your Financial Progress?

Check out the free app Personal Capital, which allows you to track how your investments as well as checking and savings accounts are doing and also view your account history to see how your accounts and overall portfolio have done over time. It’s a great tool! Sign up for your free Personal Capital account here.

 

Check out these related articles:

What are your best tips for how to become a millionaire? Are you working toward that goal now? Or have these tips inspired to you work to become a millionaire? What questions do you have? Leave a comment below and let me know your thoughts!

 

Invitation to Share

Was there something in this article that inspired you to change something about your money? Are there ideas or tips that you feel could help others? Would you please take a minute to share this article via email or social media? I would love your help to share these principles of financial well-being. Thank you!

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How to Be Smart with Money: 9 Tips That Will Cause You to Win with Money

how to be smart with money

How to Be Smart with Money

An important part of winning at life is learning how to be smart with money because money touches nearly everything that we do in our modern society.

If you learn how to be smart with your money and manage it well, you will be able to accomplish some amazing things in life such as building wealth so that you can have security and do the things you enjoy doing, retiring in comfort, helping those in need, supporting worthy causes, and more.

Tip: Pin the image above so that you will be able to refer to this article easily later!

 

 

9 Must-Know Tips for How to Be Smart with Money

In this article I am going to discuss 9 things you must do related to how to be smart with money.

 

1. Determine your why and set financial goals.

The very first thing I believe you should do when you want to be smart with your money is to figure out your financial why. Why do you want your financial situation to change? Why do you feel you need to pay off debt or start saving more money or investing for retirement? What are your ultimate financial goals and dreams?

Your why is crucial because it will give you the motivation to set crucial financial goals that will change the trajectory of your life. With simple and realistic but amazing and far-reaching financial goals, you will be able to accomplish incredible things with your money that most people never will. That is sad, but it’s true.

Many people go through life half awake, never having the ambition or the discipline or dedication to really accomplish awesome things. But you are not that person! Or if you were, you are not anymore! 🙂

You are going to accomplish incredible things in your life by setting and steadily working toward simple but incredible financial goals like building up savings for emergencies and large expenses, getting out of debt (including paying off that mortgage!), investing for retirement. helping to pay for your children’s college educations so that they will not be saddled with debt, and building wealth so that you can achieve ultimate financial freedom.

 

 

2. Make a spending plan.

Once you have determined your financial why, get after it by creating a plan to accomplish your financial goals—a financial plan, otherwise known as a budget. 🙂 But just call it a spending or smart money plan or whatever you want if you don’t love the b word.

When you create your budget, make it a zero-based budget. In other words, allocate your monthly income down to nothing on paper. You may think that this seems odd; that it would be better to leave a little money as a buffer. And that is great, if you designate that money to be put into a particular savings account or something, like your emergency fund. But don’t just leave the money unaccounted for. The reason? It’s almost certain to get spent.

No budget? No problem! Sign up below to receive a free spending tracker and starter budget forms!

 

Figure out your monthly income.

Ready to start creating your budget? Great!

Your first priority as you create your spending plan is to figure out your total monthly income. If you (and your spouse, if he or she works outside of the home) have a steady, fixed income from an employer, this is really easy. Just look at your pay statements or your bank account where you deposit the money, and record how much you make on your budget.

If your income fluctuates because you work for yourself or work on commission or in sales, then look at your pay statement or bank deposits for the last two or three months, and make your best estimate of your monthly income.

 

Track your spending to determine your expenses.

Next, begin to track your spending or else review debit or credit card transactions and receipts to estimate your monthly spending.

If you buy and pay for most everything with your debit card or credit card, this is really simple. If you don’t, then carry a little notebook with you or jot down your purchases in a note-keeping app on your phone.

Either way, track your expenses for at least a week, but preferably a month so that you get a more complete picture of your spending. If you have not been following a budget or paying much attention to your spending before now, this will likely be very eye opening, and you will likely see some big leaks in your wallet that you will want to plug.

But the good news about that is that once you fill those holes, you will feel like you got a raise! You really will! (Yeah, I might just be speaking from experience. :))

Adjust your budget as needed.

As you are creating your budget and then as you are working to fine tune and follow your budget, be flexible and cut yourself some slack. You are going to find things that you need to adjust, and it will probably take about three months for your budgeting to really start to work. But once it does, the results can be amazing as your money starts to work for you and move you toward your awesome financial goals!

Learn more about how to create a budget (or how to tweak it to make it successful) with this post on the complete beginner’s guide to budgeting.

Tip: I recommend that you start budgeting on paper if you can so that you really have to write down and see where all of the money is going. But after that, you can sign up for an online  budgeting app such as YNAB, Mint, EveryDollar, or Personal Capital if you like to make things easier. But the most important thing is that you do it, so if that means being digital from the beginning, then do it!

 

3. Differentiate needs versus wants to ensure you are being smart with your money.

As you create your budget, begin to differentiate needs versus wants, and make adjustments to your budget as you go along. Sometimes we do a pretty good job of justifying wants by calling them needs. But to truly differentiate needs versus wants, remember this: you need housing (unless you can live under a palm tree or something), but you don’t actually need a fancy or new or even nice home.

Similarly, you need food, but you don’t need restaurant food or gourmet food or to always eat name-brand food. You need transportation, but you may be able to get around with one car for a while (or even possibly no car, if you can use bikes or your feet or public transportation). And you definitely don’t need a brand-new or ultra-safe or super fancy car.

The better you can differentiate needs versus wants and base your budget on your needs first and then the wants that you can truly afford while still saving and investing adequately to meet long-term, crucial financial goals, the better off financially you will be later in life.

As you create your monthly spending plan or budget, allocate money for your needs first. That means designate money first for reasonable food, clothing, shelter, transportation, utilities, and other true necessities.

Then designate money to build up an adequate (three- to six-month; I recommend six months) emergency fund, to create sinking funds to cover future larger expenses and larger purchases (such as app and so on), and to save adequately for retirement (save at least 10 but preferably 15 percent of your income for retirement as soon as you are financially able to).

Learn more about differentiating between needs and wants here.

 

4. See where you can reduce your spending to be smarter with your money.

To be smarter with your money and reach your financial goals, you are probably going to need to reduce your spending. Fortunately, you should be able to cut your spending in the categories below pretty easily by following the tips given for each budget category.

 

Save money on entertainment.

There are many, many ways that you can save money on your monthly or yearly entertainment and related costs. Here are some of the biggest ones:

  • Ditch your dish (satellite) or cable service.
  • Save money on your cell phones or smartphones.
  • Save money on your internet service.
  • Go to the movies less.
  • Buy fewer books and movies (go to the library instead :)).
  • Go to fewer and less expensive music concerts.
  • Go to fewer and less expensive sports games.
  • Spend less on video and computer games.
  • Spend less on electronic devices.
  • Cancel your subscriptions to magazines and paid TV services (Netflix, Sling, and so on—again, videos from the library are free!).
  • Consider canceling your memberships to the gym, rec center, museums, aquariums, zoos, and the like.
  • Spend less money on recreational activities like skiing, bowling, miniature golf, playing arcades, and so on.
  • Spend less on Christmas shopping.
  • Spend less on family vacations.
  • Reduce the amount allocated to your personal monthly spending money (your fun money or blow money).

 

Save money eating out.

The average family in America spends about $3,000 a year eating out. That means there is a lot of money that can be saved here! I know it probably sounds crazy, but we spend less than $300 a year eating out. And I don’t feel deprived! Want to know why? The reason is that that frugality has allowed us to be able to reach other financial goals that we have—and to do it on one average income.

The best thing you can do to save money eating out is to simply do less of it. 🙂 But there are lots of other ways that you can save money eating out, as well! Read this article to learn how to save money eating out.

 

Save money on groceries.

 There are so many—so many!—things that you can do to reduce your grocery spending. I discuss more than 70 ways that you can save money on groceries in this article.

But here are some of the things you can do to save the most money:

 

Check out these related articles:
31 Budget-Friendly Easy and Cheap Dinner Recipes for under $5
42 Cheap and Easy Budget-Friendly Meals for under $5
13 Ways to Save Big When Eating Out!
73 Easy Ways to Save Money on Groceries without Coupons!
59 Must-Know Tips to Slash Your Grocery Bill in Half!
151 Easy Ways to Save Money: Your Ultimate Guide to Saving Money! 

 

Save money on transportation.

 Another way that you really need to be smart with your money is with your spending on transportation. The average car payment in America is close to $500 a month! Is is any wonder that nearly 80 percent of Americans are living paycheck to paycheck? Our savings accounts and emergency funds and retirement funds are sitting in our garages!

So here is what you can do to turn things around and save money on transportation costs:

Find more than 30 tips for how to save money on transportation costs here

 

Save money on housing.

For many families, housing is their single largest expense. But there are also many things that you can do to save money on housing. Here are some of my best tips for saving money on your housing:

  • Shop around to see if you can lower your homeowners insurance premiums.
  • Look into refinancing your home if interest rates have dropped. (But don’t lengthen the term of your loan! If anything, shorten it!)
  • If you are renting, find a cheaper place.
  • If you bought too much house, look at downsizing.
  • If you really want to save money on housing, consider renting out a spare bedroom (or bedrooms) either long term or on sites like Airbnb and Booking.com.
  • Save money on alarm monitoring with inexpensive services like SimpliSafe. (I love SimpliSafe!)

Check out this article for more than 30 ways to save money on housing.

 

Save money on utilities.

You can pretty drastically reduce your utility bill if you want to. Years ago I heard about a professor of economics who just couldn’t bear to see the money spent on utility costs go down the drain because he knew what that money could grow to if it were invested, and so he kept his AC up and his furnace down, and his family wore sweaters and bundled up during the winter and found ways to stay cool during the summer.

We haven’t gotten that extreme in my family (not yet, anyway :)), but it’s a little tempting! Because I hate spending money on things that have no lasting value, too! Sigh. In any case, here are some free and easy ways that you can save money on your utility bill:

  • Turn down (to 62 degrees or lower, if you can) and turn up your AC (to 78 degrees or higher, if you can).
  • Wash all of your clothes in cold water. Washing machines are so powerful these days they will still get your clothes clean even with cold water.
  • Hang your clothes out to dry.
  • Use your dishwasher less. Wait till it is full to run it, and consider using your dish drain and washing the dishes by hand.
  • Turn off lights, TVs, computers, radios, nightlights, and so on when they are not in use.
  • Unplug appliances and electronics when they are not in use.
  • Open your curtains during the day to let in the sun to warm up your house during the winter or keep them closed to keep out the sun to help keep it from heating up too much during the summer.

Also, read this article for more ideas on how to save money on utilities during the summer and this article for more ideas on how to save money on utilities during the winter.

 

Save money on clothing and shoes.

Some people just love to buy designer clothes and shoes. And they look really nice! But so does a paid-for beach house in retirement. 🙂 So we buy most of our clothes, for us and the kids, either on sale or from thrift stores or the classifieds. For now our kiddos are young, so they don’t know the difference (and I hope that even when they are older, they won’t care—and I hope they never do :)).

My sisters and I also swap clothes back and forth for our kiddos that are the same ages, which is awesome! I love to see the clothes that my kiddos wore on my nieces and nephews; it brings back such fun memories! If you have family or friends with kiddos the same age as yours, see if you can set up a kids clothing co-op!

Read this article to learn easy ways to save money on clothes.

 

5. Comparison shop.

Another super smart thing that you can do to be good with your money is to comparison shop—on virtually everything. When I have done this, particularly with larger expenses like fairly major home and auto repairs, the difference in prices I have been quoted has sometimes been surprising! Get the most bang for your buck by calling several (I usually call at least five) places or checking several stores before making a purchase or spending money on a service like a car, plumbing, or home repair.

This year we wanted to do some fairly extensive home improvements. And one of the things we just got done was to replace our gutters (they needed it!). And like I always do, I called around to several contractors who came out and gave bids. We ended up paying just under $1,000, and I think they did a great job. (From what we can tell; but we’re no construction experts!)

But the difference between the highest bid we got and the lowest was over $500! So please, please, always comparison shop, and the more expensive the purchase, the more places you should compare.

Shortly after we moved into our home (which was a foreclosure and hadn’t been lived in for over a year, maybe two) we noticed that our water wasn’t draining from our showers. And someone at our church gave us the name of a local plumbing company. They came out, and they wanted us to spend $4,000 to dig up a big bush and snake our line and do I don’t remember what else. But $4,000!

So I called around to several other places, and we ended up paying around $400 for a smaller company to come out and just augur through our line and clear out the roots that had grown into it and put down some anti-root stuff.

Now, that first company isn’t a “bad” company, at least not according to Google and my neighbor. They have a 4.5 star rating, with over 2,500 reviews. But I will never use them, that’s for sure! Because they tried to way up-sell us and go for the most expensive option instead of the least expensive (or at least a less expensive option).

And don’t even get me started about auto mechanic shops and how important it is that you comparison shop when getting vehicle repairs done! (Find more than 30 ways to save money on vehicle repairs, maintenance, insurance, and other transportation costs in this article.)

So, again, even when you have recommendations from others you trust, comparison shop. Do your own research and due diligence! Call at least three or four companies (but half a dozen or more is what I do). Want to know other ways we save around the house? You can find more than 30 awesome tips for how to save money on housing here (from maintenance to homeowners insurance and more).

 

6. Put money where it needs to go to be smart with your money and build wealth.

To put your family on solid financial footing and to ultimately build wealth, make sure to do the following things.

 

Build an emergency fund.

As I mention briefly above, it’s important for your family’s well-being that you have a substantial emergency fund. I recommend at least three but preferably six months’ worth of expenses saved in your emergency fund.

If you haven’t already, make your emergency fund its own separate savings account. You may even want to open an account at a different bank so that the money is not too easy to access, if you think you might be tempted to use it for other things besides true emergencies.

Learn more about emergency funds here.

 

Check out these other related articles:

 

Get out of nonmortgage debt.

Once you have at least a starter emergency fund of at least $1,000, another very smart thing to do with your money is to pay off all nonmortgage debt as quickly as possible.

To get out of debt, first figure out how much you owe on your various debts such as credit cards, student loans, car loans, department store loans, and so on.

Then, decide which method you would like to use to get out of debt. Depending on your disposition and what motivates you, I recommend you use either the snowball debt payoff method or the avalanche debt payoff method. Briefly, with the debt snowball method, you pay off your smallest debts first to gain momentum and keep up motivation. With the debt avalanche method, you pay off the debts with the highest interest rates first, and knocking out those higher interest rates could be what keeps you most motivated.

Personally, I recommend the debt snowball method because I think it is a better way to gain momentum, and that is the debt payoff method that we personally used.

Once you are out of nonmortgage debt and are adequately saving for larger expenses and purchases (more on that below) so that you can stop taking on new debt, work to pay off your mortgage early! Being mortgage debt free is amazing, and it is one step closer to ultimate financial freedom!

 

Save for larger purchases and expenses.

After you have paid off your nonmortgage debt, start saving toward large purchases and expenses so that you can pay for them with cash and avoid going back into debt. Debt freedom = financial freedom = peace and joy 🙂

To save for these large expenses, I recommend that you set up several separate savings accounts (also known as sinking funds). We personally have more than 20 different savings accounts for our various financial goals. You certainly do not have to be that detailed, but I would recommend that every family set up these nine savings accounts:

  • Emergency fund
  • Vehicle maintenance and repairs
  • Vehicle purchase
  • Home down payment
  • Home repairs
  • Furnishings and appliances
  • Christmas and gift giving
  • Vacations
  • Miscellaneous/other short-term savings

By having these nine savings accounts and consistently working on funding them, you will have the cash you need to take care of all of the expenses that that occur.

 

Start investing for retirement.

Once your nonmortgage debt is paid off and you are saving toward the necessary expenses above, start investing for retirement. I recommend that once you are out of nonmortgage debt you start to save 15 percent of your income for retirement as soon as you can, but at least save 10 percent.

Remember the incredible power of compound interest and start saving as much for retirement as you can as soon as you possibly can.

 

Check out these related articles:

 

Start saving for kids’ college (if applicable).

If you have children, also start saving for their college educations as soon as possible to take advantage of the power of compound interest and to help ensure that they are not burdened with student loans later in life.

 

7. Consider doing overtime, getting a second job, starting a side hustle, and finding other ways to earn more money.

I believe that there are more ways to make money today than there have ever been before. And many of these you can do from the comfort of your own home after you get back from work! Some of my favorite ways to make more money are those listed below.

 

Do overtime.

Working overtime is one of the simplest ways to make extra money. If your employer offers overtime, then consider taking advantage of it. Especially if you are in a situation where you are working to pay off debt, save up your emergency fund, or save for a large and necessary purchase, working overtime is an excellent option to help you reach those goals more quickly.

Ask for a raise or promotion.

One of the benefits of asking for a raise or promotion is that you receive additional income for (potentially) doing the same amount of work!

If it’s been a few years since you received a significant raise and especially if you’ve been an exceptional employee at work, make a list of your contributions and your accomplishments, and schedule a meeting with your supervisor to request a raise or a promotion. Focus on ways that you’ve earned the company money or saved them money.

If you learn during the meeting that a raise or promotion isn’t going to happen right away, ask what specific steps you can take in the next year or two to make it a reality. Read this article for more information on how to seek a raise or promotion.

Do freelance work.

If you work in a field that lends itself to doing freelance work, consider taking advantage of that opportunity to earn extra income. I have been doing freelance writing, editing, and proofreading since before I graduated from college with my English degree and editing minor, and doing freelance work has not only helped me gain experience in other areas besides what I do for my full-time job but has also at times (when I wanted to give the time to it) brought in significant additional income.

If you similarly enjoy and have a knack for writing, look into freelance writing jobs. You can find ideas for close to 30 freelance writing jobs here.

Freelance proofreading is another great option if you love to read and have a good eye for detail. If freelance proofreading might be a good opportunity for you, then check out this awesome general proofreading course by my friend Caitlyn at Proofread Anywhere!

Look at indeed.com, monster.com, or your favorite job search site for opportunities.

Do consulting or coaching.

Similarly, if you have job experience or a skill that lends itself to it, consider putting that skill to use to do consulting or coaching work. Popular areas for consulting include human resource (HR) consultant, public relations (PR) consultant, marketing consultant, business management consultant, and accounting consultant.

Popular areas for coaching include financial coaching, job coaching, personal fitness coaching, and leadership coaching.

Look for consulting and coaching opportunities on indeed.com or your favorite job website.

Start a side hustle.

If you would rather earn money without working another regular job, there are a lot of things you can do to earn a little extra income with a side hustle. Some ideas include starting your own small business where you turn a hobby into a money-maker, being a virtual assistant, or driving for Uber or Lyft. Learn how to start a side hustle and find out about many side hustles that you can explore.

Start a money-making blog.

The potential for significant income is one of the reasons that I started this blog. If you love helping people and enjoy writing, being a blogger might be a great fit for you. In addition to great income potential (check out these amazing income reports of bloggers who make $10,000 to $100,000 or more per month!), there are many other benefits of being a blogger, such as being able to be your own boss and work on your own schedule. Learn how to start a blog for less than $5 a month.

Make money with affiliate marketing.

Affiliate marketing is where you recommend a product or service to others, and in return for your sending business their way, a company pays you a percentage of the sale that they made because of your recommendation. Affiliate marketing can be an excellent way to make extra income; those who do it well can make thousands of dollars a month (or much more).

For an excellent course on affiliate marketing, check out Making Sense of Affiliate Marketing by Michelle Schroeder, who makes more than $50,000 a month with affiliate marketing! When I decided to start blogging, Michelle’s course is the first one that I bought.

Interested in finding out more about this truly amazing money-making opportunity? Learn more about affiliate marketing here.

 

Get a (second) job.

If you are in a situation where money is tight or where you have a lot of debt or where you simply want a bigger hammer to pound out your financial goals, then look into the possibility of one of you getting a job or a second job.

If one spouse is not working outside of the home, for example, then consider whether it would be worthwhile for that spouse to start earning an income (perhaps with a job that could be done exclusively from home).

Similarly, if one of you works only part-time, you might want to consider  going full-time at least temporarily in order to reach your financial goals more quickly.

Or consider if one spouse is available to get a second job in the evenings or on Saturday, for example, and earn more money that way.

Earn passive income.

Some options for earning passive income are to create a product you can sell, write a book, create a money-making podcast or vlog, or develop an online course. Read this article to learn more ideas for earning passive income.

Use rebate apps like Ibotta and Ebates.

With rebate services such as Ebates and Ibotta, you can earn money by shopping for things and at places where you would shop anyway. With Ebates, you generally buy items through their website to save up to 40 percent on purchases. It is primarily an online service. Ibotta, on the other hand, is an app you use primarily after you make purchases at brick-and-mortar stores. Because of this, you can actually sign up for and use both apps to save on purchases.

Sign up for a free Ebates account here, and sign up for a free Ibotta account here. You can literally sign up for both in just seconds and let the savings start stacking up.

Sell stuff on eBay, Amazon, or your local classifieds.

If you have a good eye for a bargain, you can buy items at thrift stores or garage sales and sell them for a profit on eBay, Amazon, Craigslist, or your local online classifieds.

Sell your clothes to consignment shops.

If you’re like most people, you probably have more clothes than you need. So use them to bring in some extra cash!

Have a garage sale (or regular garage sales).

Declutter your home and earn money, all at the same time!

 

Check out this article to learn more about and find more ideas for increasing your income!

 

Would you like to start making more money? Sign up below to participate in the free 10-day Earn More Money, Change Your Life challenge and learn actionable steps you can start taking today to really increase your income!

8. Automate your finances.

Another smart thing that you can do with your money that will really help you to be successful with your finances is to automate your finances as much as you can. By automating your finances, you’re not left so susceptible to temptation. And you are able to effortlessly work toward reaching your financial goals and can do so without having to make the conscious decision to save or invest or pay off debt every time you get paid.

Right after you get paid, transfer money directly to pay extra toward debt, into your emergency fund and other savings accounts, and into your  401(k) or Roth IRA. Take care of your financial goals effortlessly by funding them automatically! And then live on what is left.

You should automate your finances in order to get paid (through direct deposit); save for emergencies, large purchases and expenses, and so forth; pay off your debt (as long as you are not in an adversarial relationship with anyone you owe money to); pay bills; invest for retirement; save for kids’ college; and more.

Read this article to learn more about automating your finances.

 

9. Stay out of debt to be smart with your money.

The best way to be able to build wealth, and one of the best ways to be smart with your money, is to first get out of debt and then stay out of debt. That is because when you get out of debt—as one of my favorite personal finance gurus, Dave Ramsey, says—you free up your biggest wealth-building tool: your income.

By paying off all of your debt—including eventually paying off your mortgage—and then staying out of debt you will have all of your income to use to meet your needs and build your wealth, instead of the bank’s. And ultimately, you will be able to achieve financial freedom.

 Learn how to get and stay out of debt.

Conclusion

As you follow these steps for how to be smart with your money, you will be able to move yourself and your family steadily toward financial freedom. First you will be able to achieve freedom from overspending, then freedom from living paycheck to paycheck, then freedom from the stress of having no financial cushion (savings), then freedom from being in debt, and then ultimate financial freedom—from having to work.

With ultimate financial freedom, you will get to the point where you can choose when and how you want to work, or if you want to work. Your time will be your own to accomplish the amazing things that you want and maybe even were meant to do in your life.

So be smart with your money and go after your amazing financial goals!

 

What do you think are the most important steps related to how to be smart with your money? Did one of the steps above inspire you to try something new? Where are you on the journey to financial freedom? Let me know your thoughts in the comments below! I would love to hear your best ideas for how to be smart with your money!

Invitation to Share

Was there something in this article that inspired you to change something about your money? Are there ideas or tips that you feel could help others? Would you please take a minute to share this article via email or social media? I would love your help to share these principles of financial well-being. Thank you!

Join Our Facebook Group!

Join our closed Families for Financial Freedom Facebook group to get support and share ideas for how we can all improve our financial well-being by earning more, spending less, saving more, and investing more and reach our financial goals. You can do this! And we are here to help.

How Much Do I Need to Retire?

how much do I need to retire?

How Much Do I Need to Retire?

In this article I am going to answer this question: How much do I need to retire?

 

Tip: Pin the image above so that you can easily refer to this article about how much do I need to retire later.

 

Different Views on the Question of How Much Do I Need to Retire

Financial experts vary a little on how much they recommend individuals save toward retirement, but most of them recommend saving either 10 or 15 percent (or somewhere between the two, such as 12 percent—roughly one hour’s worth of pay per day) of your income for retirement.

So if you make $40,000 per year, or about $3,333 per month, you should save between $333 and $500 per month.

My personal recommendation is that, as soon as you can, you should start saving 15 percent toward retirement to help ensure that you retire with dignity and in comfort. Because of the wonderful power of compound interest, the money you save now is the most powerful! So let’s say you reduce your spending in various areas so that you are able to invest 15 percent of your gross income in good mutual funds that earn you a realistic 11 percent average annual rate of return, and you do that (never contributing any more than that, even, when you get raises) for your 35-year career.

By the time you retire, you would have $2,274,985 in your retirement account. That’s pretty impressive in and of itself! And if you have invested all of that money in a Roth 401(k) or IRA, then it will all be tax free in retirement. Woo hoo!

Note: If you are interested in retiring early, you may want to save 20 percent or more of your income. Learn more about the feasibility and benefits of FIRE (financial independence, retiring early).

But before you start saving for retirement, I recommend that you pay off all of your nonmortgage debt and save up a three- to six-month emergency fund. This will ensure you have a firm financial foundation to begin building wealth (which is what you’re doing when you start investing for retirement—yay!).

 

Check out these related articles:

How to Become a Millionaire by Investing Just $200 a Month!
401(k) or IRA—Which Is Better?
How Can I Save Enough Money for Retirement?Roth or Traditional IRA—Which Is Better?

 

A Great, Free Investment App

Once you begin investing for retirement, you may want to look into a great free app called Personal Capital in order to track your progress toward reaching your retirement and other financial goals. With Personal Capital, you can see not only all of your bank checking and savings accounts and even your credit cards and other finance accounts, but you can also link your retirement and regular nonretirement brokerage accounts.

This allows you to have a complete, overall picture of your current financial situation. And you can also view your account history to see how your accounts and overall portfolio have done over time. It’s a very helpful tool that I use often! Sign up for your free Personal Capital account here.

 

What Should I Invest in for Retirement?

There are many ways that you can invest, such as buying stocks, buying real estate, and buying a business, but by far the easiest and least risky way to invest of these options is to invest in mutual funds.

A mutual fund is a collection of assets like cash, money market accounts, stocks, and bonds that is professionally managed as a portfolio of investments. And mutual funds are made up of shares that represent owning a piece of a business. Each piece is a known as a stock. By owning a stock, you own a piece of a company such as a technology company, automobile company, or food company. For example, you can buy a share of a mutual fund that invests in Coca-Cola and Walmart and Ford.

When comparing cash, money market accounts (a high-yield, high-minimum deposit savings account), bonds (where a company or municipality owes you money—you’re buying their debt and they pay you back with interest), and stocks, long-term, the asset that will make the most money are stocks because they have more inherent risk than the other three options and therefore higher potential reward.

However, you don’t need to worry that mutual funds are overly risky—if they were, I definitely wouldn’t invest in them, and I wouldn’t recommend that you do, either! By investing in mutual funds, you actually reduce your amount of risk because you are investing in a wide variety of different companies, rather than buying stocks from a single company (that could go bankrupt, for example).

 

What to Invest In

I know that when I was first trying to figure out how to start investing for retirement I really wished there was someone who had my best interests at heart (and not their commission rate) who would just hold my hand and show me the best funds to invest in and why. And that’s why I will email you and share with you exactly how we choose the mutual funds we invest in (for free—no strings attached) by entering your email address below.

Should I Invest in a Traditional or a Roth 401(k) or IRA?

For many people, a Roth 401(k), if available, or a Roth IRA is a better option than a traditional 401(k) or IRA because they will have a larger income in retirement than in their working years.

And that’s what most people should strive for—to accumulate a substantial amount of wealth in order to retire with dignity and provide for themselves comfortably during retirement. And it’s a worthwhile goal to aim for because having a substantial nest egg gives you more options—more options to travel, more options to care for elderly parents or children, more options to give significant amounts to worthy causes.

A Roth 401(k) or IRA is also often a better option than their traditional counterparts for many people who have significant tax deductions now for things such as child tax credits, charitable giving deductions, or mortgage interest deductions, for example. This is because those tax-deductible items help make their taxable income lower now than it likely will be in retirement.

Learn more about investing for retirement to help you unlock the powerful potential of your future.

Conclusion

By saving at least 10 percent of your income, and better yet 15 percent, you help to ensure that you will be able to retire in comfort, where you can provide for your needs as well as many of your wants in your post-working years. By saving more money as soon as you can, you will have much more (because of the awesome power of compound interest) money available to travel, take care of your medical needs, spoil grandchildren and help pay for their college educations, give to causes you care deeply about, and more.

Invitation to Share

Was there something in this article that inspired you to change something about your money? Are there ideas or tips that you feel could help others? Would you please take a minute to share this article via email or social media? I would love your help to share these principles of financial well-being. Thank you!

Join Our Facebook Group!

Join our closed Families for Financial Freedom Facebook group to get support and share ideas for how we can all improve our financial well-being by earning more, spending less, saving more, and investing more and reach our financial goals. You can do this! And we are here to help.

How to Start Investing for Retirement: 5 Simple Steps

how to start investing--5 simple steps

How to Start Investing for Retirement

In this article I am going to share 5 simple steps for how to start investing for retirement.

 

Tip: Pin the image above so that you can easily refer to this article on how to start investing for retirement later!

How do I start investing for retirement?

I know that when you are first thinking about how to start investing for retirement it can feel really overwhelming. There are a lot of options, and it can be difficult to know the best way to go about it. But never fear—I’m going to walk you through 5 simple steps for how to start investing today so that you will feel confident in investing for your future.

 

Check out these related articles:

How to Become a Millionaire by Investing Just $200 a Month
How to Retire Early: 11 Simple Steps to Make It Happen! 
401(k) or IRA—Which Is Better?
Roth or Traditional IRA—Which Is Better?

 

Why should I start investing for retirement?

But first, before I discuss the 5 steps on how to start investing for retirement, let’s start with a powerful motivator—why.

When you’re young, it’s often hard to worry about the future or spend too much time (or maybe any time) planning for the future, especially for the far-off future that is decades away—because the realities and concerns of the now feel much more pressing and because the future is such a big unknown.

But the truth is that you need to start investing now! And I’ll teach you an easy, low-risk way to do it below. So read on!

The reality is that virtually everyone needs to invest (as soon as possible) to have a comfortable retirement and be able to provide for themselves in old age without working until they die. That’s because investments (good investments, that is) can grow considerably over time, while the value of cash depreciates over time because of inflation.

The sooner you start investing, the longer your money can grow and the more wealth you can potentially build because of the amazing power of compound interest.

Compound interest, simply put, is where the interest you earn on your money itself earns interest. Albert Einstein is said to have called this phenomenon the eighth natural wonder of the world. Compound interest allows your money to grow exponentially over time.

So, for example, let’s say you are the parent of a high school student who was a go-getter and worked every summer and earned $3,000 each summer. And then your rock star daughter invested that $3,000 she earned each year in a Roth IRA where she earned an average 11 percent rate of return on the money she invested.

Let’s say that she then finished college and started a business at 22 and worked in a career that she loved for 45 years, but she never put anything more toward retirement. With only that initial $12,000 investment over those four years of summer jobs, she would retire with $1,547,573.59 in her Roth IRA account. And that’s if she never contributed another dime!

Now, I know that a million dollars isn’t what it used to be, and it won’t be worth in 45 years what it’s worth today, but the fact that you can earn that kind of money without having to physically work for it is simply awesome.

What should I invest in for retirement?

One of the important things to consider when determining how to start investing for retirement is what types of assets to invest in. There are many ways that you can invest, such as buying stocks, buying real estate, and buying a business, but by far the easiest and least risky way to invest of these options is to invest in mutual funds.

A mutual fund is a collection of assets that is professionally managed as a portfolio of investments. With a mutual fund you and many other people buy into the collection of assets, and so you “mutually fund” that portfolio of investments.

Mutual funds are made up of assets like cash, money market accounts, stocks, and bonds.

A money market account is a high-yield, high-minimum-deposit savings account.

A bond is where you buy the debt of a company or municipality, and they pay you back with interest.

A stock is where you buy a small piece of a publicly traded company, such as a technology company, automobile company, or food company. So, for example, you could buy a stock from Coca-Cola, Walmart, or Ford.

And stock mutual funds are mutual funds that are made up primarily of stocks.

When comparing cash, money market accounts, bonds, and stocks, long-term the asset that will make you the most money, based on past performance over many decades, are stocks. That is because they have more inherent risk than the other three options and therefore higher potential reward.

However, mutual funds really aren’t that risky because you are investing in a wide variety of different companies, rather than buying stocks from a single company (that could go bankrupt, for example). Buying single stocks is what is really the risky venture, but investing in mutual funds is fairly safe as long as you are willing to keep your money invested long term.

As one of my favorite financial experts says, you won’t get hurt on a roller coaster unless you jump off. I am a fairly risk averse person, but I am completely comfortable investing in mutual funds with good long-term (at least 10 years) track records, and you can be, too.


Check out these related articles:

How to Become a Millionaire by Investing Just $200 a Month
401(k) or IRA—Which Is Better?
Roth or Traditional IRA—Which Is Better?

 

5 simple steps for how to start investing for retirement

As you can see, there are a lot of options when it comes to investing for retirement. But the KISS (keep it simple, sweetie) principle applies with investing, just like it does with many other aspects of your finances. Here are five simple steps that you can follow to help you know how to start investing for retirement.

1. Create a budget so you’ll know how much you can save (and should be saving) for retirement.

The first thing you need to do when starting to invest for retirement is to determine how much you need to save toward that goal. And the way to do that is to create a budget (or evaluate the budget you have) so that you’ll know how much you should be saving.

Most financial experts recommend saving between 10 and 15 percent of your income toward retirement. I recommend that you invest the greater amount—that you start to invest 15 percent of your income for retirement as soon as you can. And if you do that over the course of a 30- to 40-year career, you should have a very comfortable retirement. (But check out this article to find out how you can retire much sooner than that! #retireearly)

2. Take advantage of your company’s retirement match.

If you work for a company that offers a 401(k) or Roth 401(k) and that will match your contributions to that plan, then save the amount up to the full match in your company’s retirement plan.

If your company doesn’t offer a match or you are self-employed, then you can save with a Roth IRA, at least until you max it out (at $5,500). (Unless you have a really high income; then you will likely have to invest in a traditional IRA—which you can then convert to a Roth IRA.)

The reason I recommend investing in an IRA rather than an unmatched 401(k) is that you generally have a lot more available mutual funds in the IRA, and so you should be able to earn a higher return than you could in your 401(k).

After you invest the $5,500 in your IRA and max it out, then invest the rest of the money you have budgeted for retirement, till you get to 15 percent, in a 401(k) or similar account if you can, even if your company doesn’t offer a match.

3. After reaching the company match, invest in a Roth IRA.

As mentioned just above, after you have invested enough in your company’s retirement plan to receive the full match, then invest the rest of your money budgeted for retirement in a Roth IRA. You can invest up to $5,500 in a Roth IRA (and an additional $5,500 in a spousal IRA!). We have been investing our money for our Roth IRA for years with a brokerage firm called Schwab, and they have been a great company. Vanguard is another great option.

Once you start investing for retirement, I recommend that you check out a great free app called Personal Capital in order to track your progress toward reaching your retirement and other financial goals. With Personal Capital, you can see not only all of your bank checking and savings accounts and even your credit cards and other finance accounts, but you can also link your retirement and regular nonretirement brokerage accounts.

This allows you to have a complete, overall picture of your current financial situation. And you can also view your account history to see how your accounts and overall portfolio have done over time. I love this very helpful tool and use it all the time! Sign up for your free Personal Capital account here.

 

Check out these related articles:
How to Become a Millionaire by Investing Just $200 a Month!
Roth or Traditional IRA—Which Is Better?
How to Save Enough Money to Fully Fund Your Roth IRA
How to Retire Early: 11 Simple Steps to Make It Happen! 

 

4. Determine where (which brokerage firm) to invest in for your Roth IRA.

Even though I heard the advice to open a Roth IRA within a few years of when I started to invest for retirement, I am sad to say that I didn’t actually open a Roth IRA until several years later. And then worse than that, I didn’t actually start funding it until a couple of years after that! Isn’t that crazy?

And the reason was that I didn’t know how to do it and opening a Roth IRA seemed daunting. It wasn’t until I finally realized how big a difference being able to choose your own mutual funds can have on the rate of return of your investments that I finally took the plunge to open a Roth IRA.

Note: It can make a big difference! if you invest $10,000 in a mutual fund for 10 years that gets an annual average rate of return of 12 percent versus one that gets an average rate of return of about 8 percent, you will actually earn during that time at least $10,000 more from the fund that earns 12 percent. So this is a big deal!

So I strongly recommend that you open a Roth IRA as soon as you can. And it takes only about 10 minutes! (Can you believe I procrastinated that long over a fear of learning how to do something that takes 10 minutes?!)

My husband and I have accounts at both Schwab and Vanguard, and both are good companies, but our preference is Schwab. (For one thing, you can generally start investing with Schwab with less money than with Vanguard.)

Note: I am not an affiliate with either brokerage firm nor am I associated in any way with either one (I do not get compensated in any way by either company if you open an investment account with them); they are just two good companies that you could choose to invest with.

Fill out the form below and I’ll email you a simple cheat sheet that will give you the exact steps to open a Schwab retirement account in 10 minutes or less. So let’s do this!

5. Determine which mutual funds to invest in in order to adequately diversify your retirement account.

When you begin investing for retirement, invest in good mutual funds (with good long-term track records) from four main categories: large-company stocks, mid-size company stocks, small-company stocks, and international stocks.

This will help ensure that you can benefit from the growth of all these different sectors and that you don’t lose all of your money when one of these sectors declines for a time. One of my favorite financial experts, Dave Ramsey, recommends a simple formula of investing 25 percent of your money for retirement in each of these areas. That’s what we have done for more than 10 years now, and it has worked well for us.

Would you like more guidance on how to start investing for retirement?

I know that when I was first trying to figure out how to start investing for retirement I really wished there was someone who had my best interests at heart (and not their commission rate) who would just hold my hand and show me the best funds to invest in and why.

And that’s why I will email you and share with you exactly how we choose the mutual funds we invest in (for free—no strings attached) by entering your email address below.

Conclusion

With these 5 simple steps on how to start investing for retirement, you will be able to start investing in order to save for your retirement and an awesome financial future!

Want even more help on investing? Learn 9 simple steps to become a millionaire by investing just $200 a month! And learn how to have enough money to fully fund your Roth IRA here.

 

What questions do you have on how to start investing for retirement? Or what advice do you have? I would love to hear your thoughts! Leave a comment below!

 

 

 

 

Invitation to Share

Was there something in this article that inspired you to change something about your money? Are there ideas or tips that you feel could help others? Would you please take a minute to share this article via email or social media? I would love your help to share these principles of financial well-being. Thank you!

Join Our Facebook Group!

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How to Pay for College: 14 Essential Tips to Afford College without Student Loans!

how to pay for college

How to Pay for College

I know that the question of how to pay for college can be a daunting one. There is no denying that college can be expensive! For the 2017–18 school year, the average cost for tuition and fees at a public university for state residents was just shy of $10,000. And for a private university, the average annual cost was just shy of $35,000. That is no small chunk of change! Fortunately, there are many things you can do that will help you to pay for college for your children or for yourself. In this article I will share 14 important tips on how to pay for college.

 

Tip: Save the image above to Pinterest so you can easily refer to this article on how to pay for college later!

 

How to Pay for College: 14 Simple Steps to Help You Pay for College without Student Loans!

One of my proudest moments as a parent of a newborn was the day a couple of months after our first daughter was born that we opened her 529 college savings account. Though a college degree in and of itself is no guarantee of a better, higher-paying job or of job security, if you choose a field of study that teaches marketable skills and that leads to a career that pays well, the investment that you will make in your children’s education will be well worth it.

That is because even though earning a college degree doesn’t always result in a good job, there is a direct correlation between higher education and generally better-paying jobs.

Receiving a good education of some kind, whether that is through college or other job training, really is important in being able to provide a comfortable living for your family. And so even though saving for our three children’s college educations since they were a couple of months old has meant that we haven’t had as much money available for other expenses, the trade-off has been well worth it to us.

Our children may grow up largely in second-hand clothes (at least while they are young) and with mostly preowned toys, but our goal is that they will never know the stress nor feel the burden of student loans. (Or of any debt at all, for that matter—except for a reasonable mortgage.) Both my husband and I graduated with college degrees without any student loans, and that’s a legacy we intend to pass on to our children.

My husband and I were able to graduate without student loans by following many of the recommendations outlined below, and we didn’t even have college 529 savings plans or education savings accounts available to us. So if you follow the suggestions below, you’ll be that much farther ahead!

 

1. Start saving for college expenses when your children are young.

Perhaps the very best thing that can be of most benefit to you related to how to pay for college is to start saving for college as soon as possible.

Even though it may seem counterintuitive, one of the best ways to afford saving for your kids’ college is to start when they are young. I know that means that you will likely be fairly early in your career and won’t have as much disposable income as you should have later in life. But the earlier you start, the less you will have to save because of the amazing power of compound interest.

For example, if you start saving for your child right after he is born (which is what we did), then every $1 you invest could be worth about $8 by the time he or she begins college, and worth $10 or more when he or she is a junior in college.

That’s because of the rule of 72. If you are able to earn a 12 percent average annual rate of return, which is doable if you invest in good stock mutual funds, then the money you invest could essentially double every six years (on average). So after 6 years each dollar would be worth two, after 12 years each original dollar would be worth four, and after 18 years each original dollar would be worth eight. That is the power of compound interest.

As is the case for virtually all goals that you are trying to save or invest for, the sooner you begin, the better. Because saving for your kids’ college should (ideally) be a long-term goal, where you save for 10 or 15 years or more, the best way to save for your children’s college education is to invest in mutual funds. And the sooner you begin to invest, the longer your money will have to grow.

There’s a saying among personal finance experts that the best time to start investing was 20 years ago. And the next best time to start investing is today.

If you start saving $100 a month, for example, toward your child’s college expenses the month after they are born and are able to earn an average 11 percent rate of return until they go to school at age 18 (though you won’t need all of the money when they turn 18, of course), you would have $67,127 available for their college expenses. If you’ll choose a low-cost state college or university, you can pay for much (or perhaps all!) of your child’s tuition just by doing that.

Money from tax-advantaged savings account funds (which we’ll talk about in the next section) can be used to pay for tuition, fees, books, computer equipment, internet service, and even room and board.

2. Decide which savings tool is best to pay for college.

In order to take advantage of tax-free growth on the money you save for your children’s college, you can use one of three savings methods: a Coverdell education savings account, a 529 college savings plan, or a Roth IRA.

  • Coverdell Education Savings Account. A Coverdell education savings account (or ESA) is a college savings account where you can save a maximum of $2,000 per year per child. The advantage of the ESA is that you have complete control over the funds that you choose to invest in. And when you open the ESA through a brokerage company such as Schwab, you have literally thousands of mutual fund accounts to choose from.Though we started investing in our state’s 529 college savings plan (known to be one of the best in the country) shortly after our children were born, we have now switched to ESAs (through Schwab) for our children because of the greater flexibility (and thus greater potential for better rates of return) that they offer. Schwab offers low fees and has been a great brokerage company for us; it’s where we have our Roth IRA, ESA, and general (taxable) investment accounts.
  • The 529 College Savings Plan. If you are able to invest more than $2,000 a year into a college saving plan for each of your children, then the 529 plan might be the best option for you, if you want to keep things simple. The 529 college savings plans are administered by various states, but you don’t have to be a resident of the state whose college savings plan you choose to use. So, for example, you could use Utah’s college 529 plan (considered one of the best in the country), even though you live in New York. You can invest up to $14,000 per year per child without incurring the federal gift tax, or you can contribute a lump sum of $70,000 (or $140,000 for joint contributors), as long as you choose to spread the gift out evenly for the next five years. If you want the greater flexibility offered by an ESA but want to contribute more than $2,000 per year, one option is to put $2,000 in an ESA and then contribute the rest that you intend to invest in a 529 plan.
  • Roth IRA. If you are hesitant to invest money (or all of the money) for your children’s college savings in a dedicated education savings account because you’re afraid that they might not use all of the money that you invest in these plans or accounts and you don’t want to have to pay the 10 percent penalty to use the money if they don’t, then you can choose to invest instead in Roth IRAs for college savings, and the tax advantages are the same as investing in one of the two options mentioned above. However, the obvious disadvantage of this method of saving for college is that if you use the money for college, you won’t have it available to you for your own retirement expenses. But if you know that you will have ample money saved for retirement in other accounts, then this could be a good option for you. Or you could choose to save some of the money in an ESA or 529 and some in a Roth IRA.

Check out these related articles:

 

3. Decide how much you intend to contribute to save for your kids’ college.

In order to help you decide how much money to invest for your children’s education, an important factor to consider is how much of their college expenses you intend to cover. Some parents choose to pay 100 percent of their children’s college education, some choose to contribute 50 percent, and some contribute less.

Because we want our children to feel ownership of their education and because we hope that they will take their education more seriously if they feel some of the weight of having to pay for it, we’re intending to pay 50 percent of their college expenses. Or, rather, we’re intending to pay 50 percent of the average cost of tuition and fees for the state colleges in our state (though we will likely help some with housing and food and so forth as well). We hope that this will encourage our children to choose their school carefully and to not choose the most expensive college in the state.

If you can afford to pay for all of your children’s educational expenses and if they have already shown a great work ethic and other character traits you want them to have, then paying all of their college expenses may not be a bad idea. However, if paying all, most, or even half of your children’s college education will put your own financial security or retirement at risk, then you should look at contributing less or increasing your income or assets, or both.

 

4. Decide which mutual funds to invest in to help you pay for college.

As long as you have a timeframe of at least five years and you have a decent risk tolerance, you should invest in mutual funds when saving for your children’s college, in order to benefit from the greater growth that these funds historically provide (over bond funds and savings accounts and CDs, for example). If your child or children will be entering college in less than five years, then your best bet would be to use a regular savings account (or a money market account) or a CD.

But assuming you have at least five years before you will use the money, choose growth stock mutual funds that have been around for preferably 10 years or more and that have good track records. When deciding which mutual funds to invest in for your children’ ESA or 529, important factors to consider are the long-term rate of return, the expense ratio, the type of mutual fund (large cap, small cap, mid cap, and international), and the longevity of the current fund manager.

 


5. Make automatic monthly contributions to your children’s college savings funds.

The best way to ensure that you reach your goal of saving x amount for your kids’ college education is if you make automatic monthly contributions to your children’s ESA or 529 accounts. With the Schwab education savings accounts, for example, this is easy to set up.

Pro saving tip: Read this article for more information on how to automate your finances in order to save for your children’s college educations, invest for retirement, pay your bills, save for emergencies, and more.

 

6. Look for ways to increase your income to be able to save more money for your kids’ college educations.

If you want to be able to save more toward your children’s college educations, one of the best solutions might be to work on increasing your income. For more information on how to earn more money, sign up below for my free 10-day Earn More Money, Change Your Life challenge so you can start working on increasing your income today!

 

7. Expect your children to work during high school to help pay for their college.

Set the expectation that your children will work during high school during summer vacation and possibly after school as well to help pay for their college education. My dad owned his own company while I was growing up, and I worked in his office from the time I was a freshman in high school till I was a junior in college. I know that the opportunity to work in the various roles that I did taught me a lot about not only hard work but valuable skills such as communication and interpersonal skills as well, in addition to word processing and other office skills.

 

8. Lead your children to choose an affordable school.

One of the most important things you can do when saving for your kids’ college is to guide them in this very important decision of what school to choose. Even though most college freshmen are technically adults, they don’t have the experience or financial wisdom, generally speaking, to always make good decisions. They need your help, as their parents, to make wise and financially prudent decisions during this very important time of transition in their lives.

And because you are helping to foot the bill (or might be footing the entire bill) for their college education, you have the right—and the obligation—to help your children to make good financial (and other) decisions that they won’t regret down the road.

Long before you send them off to college, sit down with your high schooler and explain to them very clearly that you are willing to contribute x amount to their college education each year, but for you to be willing to pay that amount, there are some conditions that they have to meet. Here are some examples:

  • They will attend an in-state public school. Unless you have a very inexpensive private school in your state (with a price comparable to the state schools) or your child has a scholarship to a private or Ivy League school or something like that, set up the expectation now that your children will attend a public college.
  • They will be expected to graduate in four years (with a bachelor degree) and attend full time. If they take longer than that because they’re kind of loafing around, taking only 10 or 12 credits a semester, then they can foot the rest of the bill themselves.
  • They will be expected to maintain a certain GPA. I recommend at least a 3.5, but you might find a 3.0 acceptable.
  • They will be expected to work part-time (and full-time during the summer, unless they’re taking classes). Statistically, college students who work part-time earn higher grades than those who don’t. And when you think about it, it makes sense. By working college students further develop important skills like time management and a good work ethic.
  • They will live by the moral guidelines you set. That means if you didn’t allow sleepovers by the opposite sex at your home, for example, you can set the same expectation for your child while he or she is away at college. And don’t feel bad about doing so!

When you hold the purse strings, you wield a lot of power. As long as you have built a strong relationship with your children already and you don’t abuse the power you have, this can be a great tool to help bring about the behaviors (and therefore the continued character building) that you want in your college-aged kids.

 

9. Teach your children how to budget and how to keep expenses low.

Ideally, your children will have learned from a fairly young age how to budget. However, if they do not yet know how to create and live by a budget, teach them before they leave for college. Also teach them basic principles of intentional spending. This means that they know how to differentiate between needs and wants, they know how to spend less than they earn, and they know how to save for future planned and unplanned expenses (such as emergencies) and for larger purchases.

 

10. Seek scholarships.

One of your child’s jobs during high school and college should be to seek scholarships. By working hard in high school and maintaining excellent grades, I was able to receive full-tuition academic scholarships (and sometimes additional scholarships for books and fees) throughout my time at college. If your child is gifted at sports or in another area, he or she should pursue scholarships that way. And there are also many smaller, little-known scholarships that they can seek.

If your child applies for 100 small scholarships and gets awarded only 10 of them, for example, but they are worth an average of $1,000 each, that’s an extra $10,000 he or she doesn’t have to pay out of pocket. That’s worth a little time and effort, for sure! Check out this article written by one of my favorite finance gurus, Clark Howard, for ideas on where to find college scholarships.

 

11. Seek grants.

If your children qualify for Pell grants or other grants, they should apply for them. Because I had full tuition covered I never even thought to apply for grants, but I kind of wish that I had, and then I could have used the money for other college-related expenses such as housing, computer equipment, and more. You can find information about the Free Application for Federal Student Aid (FAFSA) here. For information about other grants, you can review this list of 101 college grants and this online database of college grants.

 

12. Teach your kids that they will work while they’re in college.

As I mentioned above, studies have actually shown that those who work while at college earn better grades. Having your children work while they’re in school will help ensure they avoid student loans, will teach them valuable skills, and will help them to take their education more seriously (and also help keep them out of trouble by having too much free time on their hands :)).

 

13. Teach your children that student loans aren’t an option.

According to a recent study, the average college student graduated in 2016 with $37,000 in student loans! There’s a good chance that they won’t even make that much a year at their first job out of college! Save your children the potentially huge burden of student loans by teaching them that they (and you) will pay for college in other ways and by making education choices that you can collectively afford.

When I was at school I never even had the idea to take out student loans (fortunately!), and we didn’t consider them for my husband, either. And since we hadn’t really been taught by anyone not to use student loans, I’m so very glad that we didn’t so that we didn’t have that financial burden following us for years after college.

I had academic scholarships to pay for tuition, but I paid all other expenses out of pocket from my part-time jobs, and we cash-flowed my husband’s schooling without any scholarships or grants by my working full-time and his working part-time.

 

 14. Expect your children to graduate in four years.

If you intend to pay much or most of the cost for your children’s college education, let them know that they will finish school in four years, or the rest is on them. On the other hand, if they will be paying much of the cost of college themselves, then going to school part time and working part time or even full time may be their best option. Because even if they graduate in five or six years instead of four, the amount of money and stress they will save by not acquiring student loans will be worth it.

And when you look at a working lifetime of 40 (or even more) years, one or two fewer years really isn’t that big of a deal in the grand scheme of things. What will have a far, far greater impact on their ability to build wealth is that you teach them to spend less than they earn (live within their means), to save, and to invest.

When you steer your children to graduate college without student loans, you can help set them on a path of a life free of consumer debt. #debtfreeforlife

 

Conclusion

A college education really can be affordable if you follow the guidelines discussed above. With adequate planning and preparation, you can help your children to graduate from college debt free. As is the case with so many things, the sooner you get started saving for your kids’ college, the better, in order to help them accomplish that objective.

By starting to save early, consistently contributing to a college savings fund, choosing good mutual funds to invest in, guiding your child to select an affordable school, and allowing him or her the opportunity to work to help pay for college, you can help your child to obtain a great college education without any student loans and help him or her learn essential financial and other lessons along the way.

Sign up for the free Personal Capital app to be able to track how your college savings accounts and other investments are doing and also view your account history to see how your accounts and overall portfolio have done over time. It’s a very helpful tool that I use regularly! Sign up for your free Personal Capital account here.

For more on this topic, read this article on how to save for kids’ college.

What questions do you have about how to pay for college? Have you started to save yet for your child’s college education? Which type of education savings account are you using or do you plan to use? Leave a comment below and share your thoughts! I would love to hear your ideas!

Invitation to Share

Was there something in this article that inspired you to change something about your money? Are there ideas or tips that you feel could help others? Would you please take a minute to share this article via email or social media? I would love your help to share these principles of financial well-being. Thank you!

Join Our Facebook Group!

Join our new, closed Families for Financial Freedom Facebook group to get support and share ideas for how we can all improve our financial well-being by earning more, spending less, saving more, and investing more and reach our financial goals. You can do this! And we are here to help.

A Simple Money Hack That Could Make You a Millionaire

money hack

A Simple Money Hack That Could Make You a Millionaire with Just $100 a Month!

There are lots of simple money hacks that could help you find more money in your budget. And then you can use that money to invest for an awesome financial future.

Read below to find an easy money hack that you can use to potentially save literally hundreds of dollars a month to save for retirement and build your own wealth and future prosperity!

 

Tip: Pin the image above to refer later to this simple money hack to save a million dollars!

 

 

Note: Do you know that you should be investing but you have been too intimidated or afraid to start? Or have you just been overwhelmed with the options or have meant to but just haven’t gotten around to it yet? Join the free 5-day Invest Your Money Challenge to learn the basics of investing and begin to save for retirement and your (awesome!) future today!

A Simple Money Hack to Become a Millionaire with Just $100 a Month!

Did you know that if you invest just $100 a month in your retirement fund from age 25 to age 65 and earned an annual average rate of return of 11 percent, which is very doable long term, you would have $774,992?! And if you were able to earn an annual average rate of 12 percent, also doable long term with good growth stock mutual funds, you would have $1,030,970! And of course if both you and your spouse saved that amount, you would have over $2 million! Isn’t that $1,000,000 or more worth saving just $100 a month?! It sure is to me! I love the power of compound interest!

 

Tip: Are you ready to start investing in order to be able to afford to retire someday but are stuck not knowing how or where to invest your money? Then sign up for my start investing cheat sheet below! It walks you through the simple steps of learning how to invest and the types of funds to invest in to be adequately diversified. No strings attached! I don’t make any money by sharing this information; it’s just the kind of thing I wish someone would have told me 15 years ago when we started investing for retirement.

A Simple Money Hack to Save Big Bucks!

One of the easiest ways to trim your monthly budget substantially is to spend less money eating out. And for those who work outside of the home, one of the simplest ways to save money in your monthly budget is to take lunch to work rather than eating out for lunch regularly.

Lunch is a meal that you can keep oh-so-cheap and easy if you choose to! I primarily eat either a peanut butter and jam or ham and cheese sandwich with fruit and carrots, a simple salad, or leftovers for lunch every day at work, so it keeps things very simple and inexpensive.

It is amazing to me how many of my coworkers go to the food court across the street or eat at the lunch cafeteria every day, and yet some of these same (wonderful) people complain that they can’t seem to find money to save or to invest for retirement like they would like to.

There are many things you can do to trim your expenses in order to spend less money, but one of the easiest is to save money eating out and especially save money eating out for lunch at work all the time!

To me eating a simple, cheap meal for lunch every day at work is totally worth it to save the tons of money that we are able to every year by not buying work lunches at the nearby food court or even the cafeteria where I work.

If I bought lunch every workday it would cost over $100 per month (if I bought inexpensive lunches), and it could easily cost $200 a month if I bought more expensive lunches or indulged in the vending machines and things at work regularly. And of course if my husband worked outside the home and did the same thing, it could easily cost over $200 a month for the two of us just for inexpensive lunches.

And while the average American does not eat lunch out every workday, the average American does spend close to $100 a month eating lunch out every month, according to a survey done by Visa a few years ago (which means the number is actually likely higher now).

That means in married households where both spouses work outside of the home, the average American family spends close to $200 a month (or possibly more; again, the survey was a few years ago) eating lunch out.

By bringing an inexpensive lunch every day and investing the saved money in your Roth 401(k) and Roth IRA instead, that money can grow to literally hundreds of thousands and potentially millions of dollars over the years! Learn the 5 simple steps to start investing for retirement today!

Read below to find more than 20 ideas for inexpensive lunches that you can bring to work to save more money!

 

Note: Are you ready to start investing? Then sign up for the 5-day Invest Your Money, Change Your Life mini course! Learn the basics of investing and how my husband and I choose the mutual funds that we invest in, no strings attached. I don’t make any money from sharing this information. This is just the kind of thing I wish I would have known 15 years ago when we started investing for retirement.

Inexpensive Lunch Ideas to Help You Save Your Money!

Here are more than 20 ideas for inexpensive lunches that you can make and bring from home to work:

1. Peanut butter and jelly, peanut butter and banana, or peanut butter and honey sandwiches

2. Tuna fish sandwiches (with pickle, if desired)

3. Tuna fish and egg salad sandwiches

4. Egg salad sandwiches

5. Lunch meat and cheese sandwiches (with tomato and lettuce or spinach, if desired)

6. Chicken salad sandwiches

7. Grilled cheese (with lunch meat and spinach, if desired) sandwiches and tomato soup

8. Quesadillas (traditional or lunch meat and cheese; add spinach to make them more nutritious)

9. Avocado egg salad sandwiches

10. Bacon, lettuce, tomato, and cheese sandwiches (BLTs)

11. Chicken salad supreme sandwiches

This is a chicken salad sandwich with even more good stuff added, like sesame seeds or peanuts (we generally use the kind we have to shell ourselves, since they are cheaper), chopped grapes, raisins, chopped apples, and dried cranberries.

12. Chicken salad

I tease (but it really is kinda true :-}) that the salad is just the way to get the ranch dressing to my mouth and that the salads that I really like to eat are the ones where I basically turn them into a sandwich. So my favorite chicken salad, for example, has croutons and cheese in addition to my favorite veggies like spinach, tomatoes, broccoli, cauliflower, carrots, and so on.

But whatever you like to put in your chicken salad, you can’t go wrong!

13. Traditional green salad

14. Spinach and strawberry salad

Even though I do not turn this salad into a sandwich :), it is still one of my favorites. All you need are spinach, strawberries, and almonds if you have them on hand (or substitute less expensive seeds or nuts). Here is a simple strawberry spinach salad with tasty homemade dressing:

Ingredients

2 tablespoons sesame seeds
1 tablespoon poppy seeds
1/2 cup white sugar
1/2 cup oil
1/4 cup vinegar
10 oz. fresh spinach, torn into small pieces
4 cups sliced strawberries
1/4 cup slivered almonds

In a mixing bowl, mix the sesame and poppy seeds, sugar, oil, and vinegar.

In another large bowl, combine the spinach, strawberries, and almonds. Pour the dressing over the salad, and toss. Refrigerate 10 to 15 minutes before serving.

15. Avocado tuna melt

If you love avocado and tuna and cheese, you will love avocado tuna melt sandwiches! You can find a simple avocado tuna melt recipe here:

Ingredients

2 5-oz. cans of tuna
3 tablespoons mayonnaise
1 avocado, sliced
4 slices cheddar cheese
8 slices bread
1 tablespoon butter or margarine

Directions
Mix the tuna and the mayonnaise. Butter one side of each slice of bread. Place four slices of bread in large frying pan. Spread each slice with 1/4 of the tuna mixture. Add 2 to 4 slices of avocado on each. Place a slice of cheddar cheese on top of avocado for each. Top sandwich with other slice of bread, butter side up.
Cook on medium high heat until bottom of bread is a golden brown, and then carefully flip over to toast the other side until it is also a golden brown and cheese is melted.
For even more goodness, add tomato and spinach or your favorite lettuce.

16. Avocado and chicken salad

This is another simple and tasty avocado dish, and a great option for a cheap meal. All you need for this easy salad are chicken, avocados, lime juice, green onion, and mayo.

Ingredients
2 cups cooked chicken, shredded
2 medium avocados, diced
1 tablespoon + 1 tablespoon fresh squeezed lime juice
salt, to taste
1/4 cup thinly sliced green onion
2 tablespoons mayo

Directions
In a large bowl, mix the diced avocado with 1 tablespoon of the lime juice, and season with the salt to taste. Add the chicken and the sliced green onion.
In a small bowl, mix the mayo and the lime juice to make the dressing.
Add the dressing to the chicken mixture, and mix well to coat with the dressing. Sprinkle the other tablespoon of lime juice over the top (or omit, if you want less lime juice).
Serve as is as a salad, or serve inside pita bread or as a sandwich or lettuce wrap.

17. Chicken avocado salad sandwiches

Similar to the cheap meal mentioned just above, here is another tasty chicken avocado salad sandwich recipe:

Ingredients

2 cup cooked chicken, chopped
2 ripe avocados, chopped
2 apples, chopped
1/2 cup celery, chopped
1/2 cup red onion, chopped
2 tablespoons finely chopped parsley
2 tablespoon lemon juice
1 teaspoon salt
dash of pepper
8 slices of bread

Directions

In a large bowl, combine the chicken, avocado, apple, celery, and red onion. Gently mash the avocado with a fork and stir it around so that everything is mixed well.

Add the parsley, lemon juice, salt, and pepper. If the mixture seems dry, add a tablespoon of oil.

Spread on sandwich bread, toasted bread, or pita bread.

18. Bacon, lettuce, and tomato wrap

This tasty dish is a simple alternative to regular BLT sandwiches. Simply omit the bread and keep the bacon and tomato, season to taste with salt and pepper, and wrap in large lettuce leaves.

19. Meatball sub sandwich

After a delicious spaghetti dinner, don’t just put that tasty concoction away! Take a few minutes to put some of the meatballs and sauce in a microwave-safe container, grab a couple of pieces of your favorite bread and put them in an airtight bag, and tomorrow you can have a tasty and super quick and easy lunch at work. Just reheat the meatballs, arrange them on the bread, and enjoy!

20. Pasta frittata

The meatballs aren’t the only thing you can repurpose from last night’s spaghetti fest! Making a cheap meal out of pasta frittata is another great way to use up leftovers from spaghetti. All you need are several large eggs, a little oil, some cut up vegetables such as onion and tomatoes and peppers, a couple of cups of chopped spinach, and a little shredded cheese.

Ingredients
8 large eggs
1 tablespoon oil
1/2 cup diced onion
1/2 cup diced tomatoes
1/2 cup chopped peppers
2 cups chopped spinach
4 oz. leftover or cooked pasta (such as penne, elbow, or spaghetti)
1/2 cup shredded cheddar cheese

Directions
In a large bowl, whisk the eggs. Add salt and pepper to taste. Set aside.
Heat a large nonstick frying pan over medium heat. Add the oil. Once it is hot, add the onions, and saute them until they are translucent. Add the other vegetables, and cook them until they are slightly softened. Add the spinach and cooked pasta, and cook for 2 more minutes.
Pour the eggs into the pan, and turn the heat up to medium high. Cook the mixture, frequently lifting up the egg so that the uncooked egg flows underneath, until the egg is almost fully set.
Reduce heat to low, cover the pan, and continue cooking until the eggs are fully set. Uncover the pan and turn off the stove. Sprinkle the cheese over the frittata, and then cover the pan again for another minute or two until the cheese is melted.
Loosen the frittata from the pan and slide it onto a large plate. Slice into wedges, and serve.

21. Easy pasta salad

This is another cheap meal that is quick and easy to make. Use leftover pasta and add in some of your leftover vegetables like broccoli, carrots, onions, or spinach. Toss with a little oil, vinegar, and your favorite spices, and you’re set. You can also add chicken, ham, or another meat of your choice to add protein.

Conclusion

This simple money hack is one way that you can find money in your budget to start investing for retirement and an awesome financial future!

Are you ready to start getting serious about investing for your future? Learn how to start investing for retirement here.

You can also find many ideas for how to save money on groceries, meal preparation, and more in the list of related articles below!

 

Check out these related money-saving articles:

How to Become a Millionaire by Investing Just $200 a Month!
How to Become a Millionaire in 20 Years—Starting from Nothing!
100+ Cheap Meals for When Money Is Tight
42 Cheap and Easy Meals for under $5!
31 Budget-Friendly Easy and Cheap Dinner Recipes
75 Easy Ways to Save Money on Groceries—without Coupons!
5 Cheap Slow Cooker Meals for under $5
7 Simple Steps to Use a Meal Plan to Save Money on Groceries
How to Use a Grocery Item Price Comparison Cheat Sheet to Save (a Bunch of) Money!
19 Top Tips to Save Money Eating Out
Eat Free for Your Birthday!
73 Totally Fun Free and Cheap Activities for Kids!
12 Best Tips to Save Money on Entertainment

 

Do you bring lunch to work in order to save money? If so, what do you bring to eat? I would love to hear how you are able to save money by brown-bagging your lunches for work. Or would you be willing to give it a try if you regularly buy your lunch now while at work? And what other money hacks do you have to save money? Leave a comment below and share your thoughts!

 

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