NEW YORK, February 14, 2023 (Newswire.com) - iQuanti: Just because inflation is high and the economy is cloudy doesn't mean that you have to let this negatively impact your financial well‐being. Here are four great ways that you can build up your savings and grow your way to financial independence.
1. Automate your contributions
Pre‐arranging a portion of your income to be contributed into a special savings account is one of the easiest and surest ways to save more over time. For many working Americans, this can easily be accomplished by enrolling in a workplace retirement plan such as a 401(k), 403(b), or 457. Contributions will be deducted before you ever receive your paycheck, so you won't even know that they're missing. Additionally, many people will also have the option to set up an IRA (individual retirement account) where pre‐scheduled contributions can also be arranged.
2. Invest for growth
Setting money aside is a good start, but savers need growth if they want to see their account balances grow substantially or even keep up with inflation. This can be done by putting your money to work in accounts where it has the potential to earn a reasonable rate of return.
For money that you won't need until you're done working, your retirement plans are a great place to invest. A well‐diversified portfolio of funds focusing on high‐quality stocks and bonds will classically compound to several times its original value over time.
For savings that you may need to access in the short‐term such as emergencies or major upcoming purchases (like a down payment on a house), utilize high‐interest savings accounts. Many now pay interest rates above three percent.
3. Get a life insurance policy
Many people don't realize it, but permanent life insurance options offer both a death benefit as well as a savings component. These policies last your entire lifetime and also have cash value, which builds value over time within the insurance policy. Policyholders are allowed to borrow against their cash value after a certain point, and this could give them access to tax‐free money that they can then use for expenses.
4. Eliminate your debts
Nothing works against your savings quite as much as debt. If you've got a credit card balance, student loans, or any other payments that cut into your budget, eliminating them should be a priority so that you can allocate more to your savings and investment goals.
One way to do this is with the debt snowball method. This is where you prioritize paying off the debt with the smallest balance first and then roll the payment towards the debt with the next highest balance, and so on. The result is a payment that gets bigger (like a snowball) until eventually, you've become debt free.
The bottom line
The best way to start building your savings is to automate your contributions into a retirement account. Also, consider life insurance options that come with cash value. Finally, use the debt snowball method to pay down your debts so that you'll have more money in your budget to finance each of these strategies.
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Information herein is intended to provide general guidance and does not constitute legal, tax, or accounting advice regarding any specific situation. Aflac cannot anticipate all the facts that a particular employer or individual will have to consider in their benefits decision‐making process.
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Original Source: 4 Ways to Build Your Savings