How do I start saving money when I have none left over?
I keep hearing I should save money but at the end of every month there's nothing left. I'm not living extravagantly. How do you start saving when it feels like there's no room in the budget? Is the answer to earn more or spend less? How do people on modest incomes manage to save?
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The simplest advice I ever got was: spend less than you earn and invest the difference. Sounds obvious but most Americans don't do it. Track every dollar you spend for a month — you'll be shocked where your money goes.
4 Answers
The simplest advice I ever got was: spend less than you earn and invest the difference. Sounds obvious but most Americans don't do it. Track every dollar you spend for a month — you'll be shocked where your money goes.
Taxes are the part everyone forgets about. Whatever you're planning, factor in what you'll owe Uncle Sam. Talk to an accountant — a good one saves you more than they charge. H&R Block is fine for simple stuff but get a real CPA if it's complicated.
The biggest financial mistake I see people make is not having an emergency fund. Before investing, before paying extra on debt, save 3-6 months of expenses in a savings account. This protects you from going into debt when unexpected things happen.
Talk to a fee-only financial advisor, not one who earns commissions on products they sell you. The commission-based advisors have an incentive to recommend products that benefit them, not you. A fee-only advisor charges a flat rate.
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