14.8 C
New York
Sunday, April 18, 2021

One easy way to help your bank account grow

- Advertisement -
- Advertisement -

While it’s easy to get caught up in our endless race to maximize our productivity, we often forget how important it is to have a healthy financial life. Paying a little bit less for everything you own — from food to car insurance — could really add up.

The average American household with savings is woefully short. Even amid an historically high stock market and record low interest rates, that number has stayed roughly at $25,000. That means that workers who save toward retirement instead of risking their capital in the market are leaving a lot of money on the table. And every dollar that sits uninvested is a dollar that could be improving your quality of life, whether it’s retirement, tuition or any number of life expenses.

While saving money may be hard, reducing spending on areas that don’t make a difference has a way of improving your life, whether you’re retired or not. As a basic rule of thumb, every dollar you save should grow in value at a 4 percent compound annual rate of return. So, say you start by saving $50 a month, you will have $844 at the end of 10 years, assuming your investment grows at the annual rate of return.

Let’s imagine that in 10 years, the same amount of money compounded at that same rate was invested for a shorter period of time. Instead of a decade, it’s 20 years, or $1,797.10. A 5 percent annual inflation rate, which is roughly in line with the official CPI for July 2016, translates to an increase of $144.20 for this shorter period of time.

Regardless of how much of a savings goal you’re working toward, there are steps you can take to make it easier to accomplish.

Understand the triggers that drive your spending. A growing amount of money meant for the future may tempt you to spend on things you’ll actually forget about in 10 years, just like blowing up your credit card bill in 10 weeks. Don’t overspend on things that don’t provide a direct benefit in the near future or on your debts. Or, as mentioned above, think of things you’ll actually use. These can be things like groceries, entertainment and transportation.

Make the most of refund checks. Many people blow the money they receive in a bonus or annual check by spending it all at once, or buying something like a new car, or withdrawing the money to purchase stock. Only when it hits the account does the recipient get a sense of what they actually own in that new asset, so returning the money to the account, either for now or at a later date, is critical.

- Advertisement -

Latest news

Colorado Rockies lose 6-4 after losing 2 major-league home games for first time

NEW YORK — Marcus Stroman’s wild pitches were the least of his worries on Friday night.The Toronto starter mowed down the Colorado Rockies for...
- Advertisement -

Study Concludes That Domestic Violence Laws Have No Predictive Value

Investigations of domestic violence involving law enforcement officers and law-abiding civilians have failed to predict these shootings in any significant way, according to studies...

Time to The Daily Show — David Beckham in an Aussie stadium

The advertising companies hold court, insisting they're not making or reading the press.Every few minutes a bottle of claret smothers your collar, followed by...

Yankees not so ready to let their top prospect go home after a strong spring

Nobody really noticed when the Yankees’ first-round draft pick last year, Gleyber Torres, decided to turn pro out of high school. But New York’s...

Related news

Colorado Rockies lose 6-4 after losing 2 major-league home games for first time

NEW YORK — Marcus Stroman’s wild pitches were the least of his worries on Friday night.The Toronto starter mowed down the Colorado Rockies for...

Study Concludes That Domestic Violence Laws Have No Predictive Value

Investigations of domestic violence involving law enforcement officers and law-abiding civilians have failed to predict these shootings in any significant way, according to studies...

Time to The Daily Show — David Beckham in an Aussie stadium

The advertising companies hold court, insisting they're not making or reading the press.Every few minutes a bottle of claret smothers your collar, followed by...

Yankees not so ready to let their top prospect go home after a strong spring

Nobody really noticed when the Yankees’ first-round draft pick last year, Gleyber Torres, decided to turn pro out of high school. But New York’s...
- Advertisement -