I am 59 and lost most of my retirement to my bankruptcy.
I know $200 a month in savings will not pay for my retirement, but I have six years until I can collect my Social Security check, and I have to at least build a good emergency fund.
Usually, most Certified Financial Planners will recommend to have enough money in a liquid account that will cover your expenses for six to 12 months if you lost your job or, for whatever reason, could not earn income for an extended period of time.
So, how much money will I have after six years of saving $200 a month. Obviously, I will have at least $2,400 times seven years. That comes to $14,400. But what about interest. If U average 6 percent interest a year my $14,400 will total significantly more.
I could put the money into a Roth IRA, which would allow me to withdraw the principal tax-free when I turn 59 ½, which is in about nine months. The contributions to the Roth IRA, however, are not tax deductible. That’s OK for now.
But the question most people have is how can I save $200 a month.
One easy way is to have the money automatically withdrawn from every paycheck. If you get paid twice a month, you could have $100 sent to your Roth IRA every time you get paid. Out of sight, out of mind. Or, if it isn’t my checking account it won’t get spent.
Here are other ways you can start saving $200 a month:
- Deep-six your cable subscription. Do you really need 100s, if not 1,000s of channels. Instead, watch all your favorite shows online. You can even stream it from your tablet or laptop to your TV set. You can save from $50 to $80 a month.
- Do you really need Netflix, Hulu and Amazon Prime? Save another $9 a month.
- Do you regularly eat lunch out during the workweek? Start packing your own meal. You can save $30+ a week, depending on where you were eating..
How is that so far? You already have saved $90 to $129 a month. Here are other things you can do:
- Check out your car insurance. I was with one company for 30+ years but when my monthly bill came to $125 a month, I started comparison shopping. I saved almost $40 a month by switching to another company..
- If you are a major movie goer like I am you can save a lot of money by choosing when you go to the theater. Yes, you can save a lot more just watching all the movies on Netflix or Hulu, but I don’t enjoy movies online. That’s why I go often to the movies at the theaters. Since just the tickets are about $11 each, I can save $5 if I go on value Tuesday or save $9 if I wait until the movie reaches the $2 movie house. In my city, I also belong to the film society, which operates both a mainstream movie theater with first-run films, and the independent art house. My membership cost $50 a year. You get two free passes plus one or two bags of popcorn for free. And the movies only cost $5 each. Plus, their concession food is much cheaper than the chains. One last trick, go to the 10 or 11 a.m.showing. It usually costs about $6 at certain movie theaters. If I save $5 every time I go to the movies, I will save at least $60 a month. Sometimes less, sometimes more. (Sneak in food and you save even more.)
Now with the $40 from the car insurance and the $60 from carefully choosing when I go to the movies and where, I have saved an additional $100 a month.
I haven’t scratched the surface on ways to save money, and I am right $200 a month. Take a deep look at what you are spending money on. Set priorities and cut the fat.