NEW YORK -- A common question Financial Advisors hear from clients is, “How can I save more than I’m saving now?” Fortunately, there are several ways you can accomplish that goal with a bit of professional help.
Lowering your expenses by a modest amount such as 1% could allow you to boost your savings initiatives as much as a comparable increase in pay. To gain insights into your current spending habits, consider downloading a budgeting app for your smart phone. They’re much easier to use than they used to be and make expense tracking very simple. For example, many apps allow you to record your income and spending on the go, incorporating information from various accounts, in order to have an up-to- the-minute overview of your financial standing each day. You can then look for inefficiencies--and ways to economize.
Reduce credit card expenses
On average, each US household with credit card debt owes a balance of more than $15,000.1 You can eliminate such debt faster--and start saving more--by paying more than the minimum monthly amount on your credit cards each month.
For example, assume you have a $1,000 credit card debt with a 12% interest rate. By paying $20 each month, it would take 67 months to eliminate the debt and would cost you $353.43 in interest. But by doubling your monthly payment to $40, you would be out of debt in just 27 months. Your interest costs would be less than half--$103.28. Then, when you finish paying off your balance, redirect the money you’d been spending on debt each month to a savings or investment account.
Another way to tackle debt expenses aggressively is by consolidating credit card balances to a single, lower-rate card. Comparison shop for the best rates, but beware of “teaser” rates that start low then jump higher after an initial introductory period ends.
Check back next week for two more moves to consider to try to increase your savings.
At Morgan Stanley, we can help you implement effective strategies for reducing expenses and set up customized savings and investment plans to help pursue your goals. Call me so we can talk about the best way to get started.
Footnotes/Disclaimers: 1Source: NerdWallet Finance, July 2015.
If you’d like to learn more, please contact Julia A. Peloso-Barnes , CFP®, CPM®, ADPA®, CPRC®
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