Saving money is a learnable skill, not just an innate trait that some people have and some people don’t. Big spenders can be rehabilitated and brought back down to earth. All that they need is some discipline, some time to build new habits and the education of how money can actually work for them. The miracle of compound interest can be revealed to anyone who is willing to listen. And when the saving party starts, it makes sense to open an IRA so that you can benefit in your golden years from all the extra dough.
The first thing to do when you get a paycheck, is to automate saving at least 10%. Ideally, that should start from your first job, whether that is mowing lawns or delivering newspapers. Putting away that 10% before you even see it will get you used to a smaller amount of spending money, so that you have that chunk of saved change to fall back on, in case you need it. There are lots of ways to make your savings automatics, transferring a bit from your checking to your savings at the same time every month.
From there you need to start keeping a budget. When you are saving for your IRA, it helps to be able to keep track of your expenses, so that you can really understand where your money is going and how to keep it from flowing out so fast. Figure out how your expenses line up with your income and where you can cut back so that your income is always ahead. The more you make, the more you put away. Don’t succumb to lifestyle creep.
Once you have enough cash to start an IRA, do it as soon as possible. The earlier you start to save, the sooner your compound interest can being to take effect. If you start saving into an IRA at 25, you will have a lot of money in your coffers at 65. If you start to save at 35, there will still be a nice chunk of change in there, but don’t be surprised if it is hundreds of thousands of dollars less than if you had started earlier.
Cutting back on your daily and monthly expenses is something that can be worked on. Think for a second. Do you buy coffee every day from your local coffee shop? If so, it can add up faster than you might expect. Take a look at how much you are spending. If you are dropping $2 per day on coffee that can be $40 a month on your java habit. That is hundreds of dollars per year you are spending for your daily caffeine fix. Where could that be better spent? How about in your IRA every month, so that you can really start to earn money on that nest egg.
Look for ways to cut down on your fixed monthly expenses as well. Try to negotiate with your cable company to bring down your bill. Cord cutting is becoming more and more popular these days. You should always shop around for car insurance and homeowners each year, once the policy is about to expire. There are always companies out there looking to give you a deal in order to switch.
Once you start saving that green, you can starting powering up your IRA. Happy saving!