Jack Howley Shares Six Tips for People Who Want to Increase their Savings and Investments
Many people report that they have no retirement savings at all. According to the Federal Reserve Bank, up to 25 percent of all Americans lack this crucial form of savings. Even fewer Americans have robust savings and investment habits outside of retirement planning.
Jack Howley, a wealth expert from Naples, FL, shares six pieces of advice for people who want to turn their savings and investment habits around, ensuring a prosperous and secure financial future.
1. Automate Savings and Investments
One of the best ways to save more is by automating the process. It is possible to deduct money from your checking account every month and put it directly into savings or investments. Once you have become accustomed to the money leaving your account each month, you won’t miss it. Automating your savings and investment habits means that you won’t be tempted to spend this money each month but will instead put it productively toward your future.
2. Make a Monthly Budget
Most people keep track of their checking and credit card statements, but they are still unsure how much they spend each month. It is a good idea to sit down and lay out your monthly budget, analyzing your needs, wants, and other expenses.
Most financial experts believe that a 50–30–20 scheme works best for arranging your expenses. Fifty percent should go to things you need, 30 percent to something you want, and 20 percent to savings and investments.
You should examine your budget for unnecessary expenses. Perhaps you are spending too much to lease a luxury car, and a less ostentatious vehicle would do as well. Perhaps you are eating out several times a week at both lunch and dinner. Focus on trimming your discretionary expenses and putting this extra cash into investments and savings.
When creating your optimal budget, it is necessary, to be honest with yourself. Do you need cable television, new clothes, or movie tickets? How many streaming video services do you have, and can you drop any of them without missing out? The goal is not to deprive yourself but to live on as low a budget as possible without compromising your quality of life.
3. Build an Emergency Fund
Everyone should have an emergency savings fund to cover unpredictable expenses. It is recommended that most people build an emergency fund of up to six months’ pay. This amount can be discouraging for younger people and those living on a tight budget with a high amount of debt, but starting small is better than having nothing in this account.
Over time, as you refine your monthly budget, you can put more money into this savings account. This will help you weather any unexpected financial storms like a medical issue, car repair, or home repair.
4. Pay Off High-Interest Debt
One of the factors that get in the way of many Americans’ savings habits is the presence of high-interest debt. When only paying the monthly minimum, you may be putting all of your money into interest and none into the capital you borrowed from the bank.
It is crucial to pay as much as you can afford toward high-interest debt. Pay off the highest interest balances first since this will cut down on the amount of interest you will need to pay over your lifetime and ensure your future financial health.
5. Know Where to Invest
There are many good investment vehicles for beginners. After you have contributed enough to your 401(k) work to receive full matching from your employer, it may be a good idea to branch out past it. Perhaps one of the easiest to get into is the mutual fund. Index funds track the overall performance of the market. Investing in an index fund is easier than choosing individual stocks and requires less monitoring of the market.
Be sure that your investments are properly diversified. With diversification, you can feel better about possible negative movements in the market. It is also smart to invest in higher-risk investments when you are young and gradually reduce your risk as you get closer to retirement.
Overall, if you feel uncomfortable allocating your investments, it is good to speak with a certified financial planner. This person has no financial stake in how much money you invest in particular vehicles, unlike a corporate wealth advisor.
6. Make Sure You Are Fully Insured
One of the best ways to ensure your future financial health is to make sure you have good insurance policies. Home, life, health, and auto insurance policies should have generous limits and as low a deductible as possible within your budget. Life insurance can help your survivors pay off your debts after you are gone and ensure that your family is supported, especially if you have young children at home.
Understanding How to Maximize Savings and Investments
When you follow these six tips from Jack Howley, you may find that it is easier to maximize your savings and investments. Jack Howley believes that everyone should carefully look at their monthly budget and see whether they have savings or investment opportunities.