16 Savings Quotes - The Secrets of Wealth Building

1. All days are not the same. Save for a rainy day. When you don't work, savings will work for you. - M.K. Soni

 2. A penny saved is a penny earned. - Benjamin Franklin 

3. Save a part of your income and begin now, for the man with a surplus controls circumstances, and the man without a surplus is controlled by circumstances. - Henry Buckley 

4. Wealth can only be accumulated by the earnings of industry and the savings of frugality. - John Tyler 

5. A penny here, and a dollar there, placed at interest, goes on accumulating, and in this way, the desired result is attained. It requires some training, perhaps, to accomplish this economy, but when once used to it, you will find there is more satisfaction in rational saving than in irrational spending. - P. T. Barnum

 6. A simple fact that is hard to learn is that the time to save money is when you have some. - Joe Moore 

7. No one is rich whose expenditures exceed his means, and no one is poor whose incomings exceed his outgoings. - Thomas Chandler Haliburton 

8. Resolve not to be poor: whatever you have, spend less. Poverty is a great enemy to human happiness; it certainly destroys liberty, and it makes some virtues impracticable, and others extremely difficult. - Samuel Johnson 

9. It is never too early to encourage long-term savings. - Ron Lewis 

10. The habit of saving is itself an education; it fosters every virtue, teaches self-denial, cultivates the sense of order, trains to forethought, and so broadens the mind.- T.T. Munger 

11. Savings represent much more than mere money value. They are the proof that the saver is worth something in himself. Any fool can waste; any fool can muddle, but it takes something more of a man to save, and the more he saves the more of a man he makes of himself. Waste and extravagance unsettle a man's mind for every crisis; thrift, which means some form of self-restraint, steadies it.- Rudyard Kipling 

12. A man who both spends and saves money is the happiest man because he has both enjoyments.- Samuel Johnson 

13. Spend what is left after saving. — Warren Buffett 

 14. By definition, saving — for anything — requires us to not get things now so we can get bigger ones later. — Jean Chatzsky 

 15. Don't spend your life working for money; save money and hire it to work for you.-Dr. John F Demartini 

16. The reason saving comes before investing is that you need to have seed before you can sow it in anticipation of a harvest. -Rajen Devadason

How to Put More Money in Your Savings Account

Savings Account

For so many people who are dealing with debt, having a savings account may seem like an unrealistic goal. Regardless of your income and what your current financial situation is, having a savings account is vital for your financial health. If you think having a savings account is out of your reach or you are looking for simple ways to make that amount grow, here are some helpful, simple ways to increase the balance of your savings account.

How to Put More Money in Your Savings Account

1. Open a separate savings account.
   If you haven’t done so already, open a separate account for your savings. If you are trying to save money in the same account you write checks, use your debit cards, and pay for bills and living costs, it is easier to start to dip into your savings. If you open a separate account, you have a clear picture of how much you have saved.
2. Pay yourself every month.
   When you sit down to pay your student loan, credit cards, rent, and other bills each month, pay yourself by making a deposit into your savings account. Making it a habit will make it easier to increase the amount you have saved, even if it is a small amount.
3. Add savings to your budget.
   While you are creating your new budget, add savings to the list as well. Just as you factor in costs for food and entertainment, you can factor in an amount for savings each month. Make the budget balance by trimming money from your other flexible areas, like entertainment or buying gifts.
4. Create savings goals.
   It may inspire you to save more if you have goals and aspirations for your money. If you are married or have a joint account with a partner, talk about your goals with them. Outline your goals and the timeline for these goals. And of course, discuss your steps to achieve this goal. If you aren’t on the same page as your spouse, read 5 Ways to Save Money When Your Spouse is a Spender.
5. Continue “paying” completed bills.
   When you are done completely paying off a bill, such as a credit card balance or doctor bill, continue to “pay” that same amount to your savings account. You were already used to paying this balance each month, so you should be able to part with this money easily.
6. Take advantage of employee savings programs.
   If your employer offers a match in your 401K, take advantage of this fantastic program. It is saving your money plus a bonus.
7. Consider a linked debit and savings account.
   There are bank accounts that round up each purchase you make on your debit card, and then deposit that money towards your savings. For example, you might pay for a dinner that is $40.05. Instead, you would be charged $41. That 95 cents are then directly deposited to your savings account. It may not seem like much but think about each purchase you make and you’ll realize that the amount can really add up quickly.
8. Automatically save from your check.
   Some employers offer to directly deposit a portion of your paycheck into a savings account instead of putting it into your checking account. While you can do this yourself, if they offer it, it might be a good idea to sign up so you don’t even have to think about it or get tempted to spend it instead.
9. Increase your income.
   Sometimes after paying bills every month and living expenses, there is simply nothing left. If that is the case, increase your income. There are many ways to do this. If you already have a full-time job, consider if you can ask for a raise or take on extra hours. Get a part-time job. Take on side jobs like doing housework, landscaping, babysitting, tutoring, giving a music lesson, walking a neighbor’s dog, or any other small way you can increase your income. With your extra income, you can then put this towards your savings account.
10. Cut expenses.
    A quick way to increase your savings account is to cut your expenses every month. First, go through your bills you pay every month. Can you cancel your cable? If not, consider bumping down to a smaller package with fewer channels. Call your cell phone company to ask if there is a smaller, less costly phone plan. Take on a roommate to split rent and bills. Cut back on your electricity. Use what you have instead of buying new clothes or other items. Cook at home and eat leftovers instead of heading out to restaurants. Find free and cheap activities to do with your family and friends instead of paying for expensive things to do. Try to walk and bike whenever possible to save money on gas. Go through your credit card and bank statements from the last several months. Highlight the items that were “wants” that you can do without. Now try to avoid these types of purchases. Take the money you saved, and put it in your savings account.
11. Put any unexpected money into the savings account.
    Whether it is a birthday or holiday present, a tax refund, a bonus from work, a credit, rebate, or any other type of money you weren’t expecting, put it into your savings account. Some credit cards offer cash back rewards where you earn money for charging. If you are enrolled in this, when you get the cashback, put it right in the savings account.
12. Stop making excuses and putting it off.
    Many young people don’t think they need to worry about saving quite yet, and sometimes older people feel like it is too late. People feel like they don’t make enough money to save or they really don’t need to save because they will always have the opportunity to work and earn more money. Whatever your excuse is for not having a savings account and not saving money, stop using it. Saving money is hard, and it could be overwhelming because it forces you to take an honest look at your finances, but it is important.

How have you increased your savings account? If you haven’t yet, which of these ways would you like to try?

Source: http://www.mydollarplan.com/how-to-put-more-money-in-your-savings-account/#ixzz3nCnwwyif

7 Ways to Make Your Savings Grow Faster Automatically

Having trouble putting money aside? Here are some systems to put in place so you can amass cash without thinking too much.

What are you saving money for?

European vacation? Kids' college tuition? An emergency fund for a natural disaster, disease, or job layoff? Or maybe you're dreaming of the perfect retirement.

Sometimes we do better at saving our money; other times it's tough. Collectively in June, the latest month for which figures are available, we socked away $646.3 billion, or 4.8 percent of our disposable income, according to the U.S. Bureau of Economic Analysis. That rate was up slightly from May but was less than half of its 25-year peak of 11 percent in December 2012.

How much did you put away? Not so much?

"If you have trouble putting money aside in a savings account, maybe the solution is to stop struggling and put things on autopilot," says Money Talks News financial expert Stacy Johnson.

Here are seven tips from Stacy and others to get you going, whatever you're saving for.

1. Pay yourself first. Payroll deduction is the single best idea and one of the oldest. Have money automatically taken out of your paycheck and transferred to a savings or retirement account. See if your employer allows you to directly deposit your paycheck to multiple accounts.

If you can pay your bills on your current income, send any additional income from raises, bonuses, cash awards, or other windfalls straight to savings, too. If your air conditioner conks out or it's time to take that cruise, you'll have a nice sum of money waiting for you in the bank.

2. Round up your savings. Some banks, including Bank of America, have programs that automatically round up debit-card purchases and then transfers that amount to your savings account. For example, say your tall, half-caf, non-fat vanilla latte costs $3.50, your bill would be rounded up to $4; the extra 50 cents would be deposited into your savings account. So essentially you get a treat now and "keep the change" yourself to save toward another treat later. That act alone daily would build to a painless $182.50 over the course of one year.

3. We all could use a little change. The low-tech version of the round-up program is stashing your spare change at the end of each day. Keep it in a jar, mug, glass, or piggy bank. When your container is full, or on a set schedule, you can turn that change into a bank deposit. Stacy says he turbo-charges this plan by stashing singles as well as coins.

Coinstar will exchange your coins free if you accept your money loaded onto an egift card from sponsoring partners such as AMC Theaters, The Gap, Sephora, or Toys R Us. That won't raise your savings account balance, but it will give you the opportunity to save your spare change for a special item.

4. Pay with cash. You'll have more cash to stash, too, if you pay with real dollar bills, 5s, 10s, and 20s when you shop. Using cash automatically makes you spend less compared to plastic. An oft-quoted Dunn & Bradstreet's study says people spend 12 to 18 percent more when using credit cards instead of cash. McDonald's says a credit card user's average ticket is $7, but cash customers usually spend only $4.50.

Why? If you're worried about schlepping back to the ATM to reload your wallet, you will be less tempted to spend more cash than you planned. You'll be more inclined to pass on a higher-end model of a product you already intended to buy; also, you'll stick to your shopping list and resist in-store temptations to buy more items than you intended.

5. Make charging rewarding. If you must use a charge card, use one that offers cashback or rewards. Then you're earning cash or equivalents without effort.

You can check out who's got the right card for you in the Money Talks Solutions Center.

6. Bank your discounts. What do you do with all the money you save buying bargains? Check your receipts. Most now conveniently tell you how much you saved on a sale item vs. its regular price, or how much you saved by redeeming coupons. Add them up. Did you buy a cheaper generic and save a bundle over a name brand? Track the difference.

Make it a habit to reward yourself by placing all the money saved from those bargains in your savings account.

7. Automate your transfers. Check with your bank or credit union about how to set up automatic transfers from your checking account to your savings account. This is another way of making sure you pay yourself first. You can even set up sub-accounts and label them for special goals, like college or a new car fund.

Now that your savings are on automatic, relax, and watch your balance grow.

7 Reasons Why Malaysians Don’t Save

Do you have a problem with saving money? You are not alone.

We all have our excuses or reasons for why we can’t save. The only way to overcome this difficulty is to realise and identify the problem first. Then, we should work towards eliminating our excuses and working to find better solutions.

In 2012, Visa conducted a Financial Literacy Barometer survey on over 900 participants in Malaysia. The survey showed that one in five respondents had no savings at all and over 70% cannot endure a personal emergency of over three months.

That’s pretty scary, and to overcome this biggest financial hurdle, one must understand the cause.

Here are seven excuses that are perhaps unique to Malaysians for not saving money—and how you can bust them to build your financial stability.

1. Low income

The most common reason for not saving money might not seem like much of an excuse at all for many. Instead, it might feel more like a fact. Currently, Malaysia’s minimum wages is RM900 for Peninsular and RM800 for Sabah and Sarawak. This is hardly enough for a family to fulfil their basic needs, what more saving.

It is easy for one to save money when they make four or five figures a month. However, if you earn minimum wages and live in a city with a high cost of living, it can be difficult to save money no matter how frugal you are. It’s scary because the importance of savings is especially important for those in the lower-income bracket.

It’s essential that you try your absolute hardest .to save. Even if it’s a little bit at the start. If trying to cut corners on your spending fails, you might want to look into increasing your income.

Quick tips

Negotiate for a raise, consider finding a different position, work more hours, or establish some part-time work on the side by monetising your hobbies.

2. Lack of financial literacy

People with higher financial literacy will assume greater responsibility for their financial well-being. For example, individuals need to determine not only how much to save for retirement, but also how to allocate retirement wealth wisely. They can learn about budgeting and saving to manage expenses and debt. Indeed, financial literacy is an essential living skill for all of us to build financial security and achieve financial well-being.

However, individuals with low financial literacy are less likely to take calculated risks and invest their money in stocks. Many have also fallen prey to financial scams and lost their life savings.

Quick tips

You must stop telling yourself this excuse. There are so many fantastic resources at your disposal that will help you boost your financial education.

On the bright side, if you’re reading this article then you’re on the right track!
Take the initiative and start reading up on personal finance and how money works in the real world. Seek help from trusted professionals and don’t be afraid to ask questions.

3. Servicing multiple debts

Another reason that prevents people from saving money is the continual need to play catch up on their debts. You most likely fall into this category if you owe massive amounts of debts – credit card, student loan, personal loan, housing loan and/or car loan.

The worst part about this position is that it is hard to get ahead. Once you are behind, it makes it that much harder to reverse things unless you make drastic changes.

According to the Malaysia Department of Insolvency, 41 Malaysians are declared bankrupt every day, with the majority of them being under the age of 44. The main reasons cited are the inability to pay off car loans, poor control of credit card usage and a failure to pay off personal loans.

It is highly possible for an average Malaysia earning RM4,000 to service debts worth RM3,700 every month:

	Monthly repayment
Total	RM3,700
Credit card	RM500
Student loan	RM200
Personal loan	RM300
Housing loan	RM2,000
Car loan	RM700

Sure, you need to repay your debt. But it’s not the only financial priority that deserves your attention. Your twenties and thirties are your prime saving years. A Ringgit saved today can be more than a Ringgit earned tomorrow – thanks to the power of compound interest over time.

Quick tips

You can put the bulk of the money available each month toward debt repayment. But still set aside 10% to 20% for savings. It’s okay to work towards more than one financial goal at a time.

It’s important to know how to clear your debts effectively so you can start saving quicker. Here are some effective methods!

4. A low financial incentive for saving

Savings and fixed deposit (FD) accounts do not yield returns as much as investments do. The maximum interest rate offered is only 4% per annum, which may come with various terms and conditions. If that’s not bad enough, the current inflation rate stands at about 1.8% – and this means the effective interest rate we earn from our savings is only 2.2%.

Some may still stick to savings and FDs as they have a low tolerance for risk and is deadly afraid that they will lose all their hard-earned money in investments. However, understanding how an investment works can help you take calculated risks when it comes to growing your money through investments. Consider investments like unit trust, REITs and share trading if you are looking for a higher yield for your savings.

Quick tips

Savings or FDs accounts can be good to put some of your savings intended for an emergency as they are more liquid than investments. They are a place to stash away your cash so that you do not use it until you really need it.

5. Procrastination

This is another huge financial mistake. Procrastination can be very costly; for example, if you save RM100 per month for 25 years at an interest rate of 3% you will accumulate RM44,712. If you chose to start saving later, and you saved for 15 years instead, you would only have accumulated RM22,754. This is the advantage of compounding interest. And this is a really conservative example!

Quick tips

If you start saving earlier, you can get away with making smaller monthly contributions to your nest egg than if you waited and tried to play catch up down the road.

Let compound interest do the heavy lifting for you!

6. Having the wrong misconception of saving

Whenever there is a hike in petrol prices, we can see Malaysians queuing up at the petrol station to fill petrol the night before the price rise. They somehow believe that they are saving money on petrol – which is a misconception altogether.

If a Toyota Vios driver decided to fill up a full tank before the recent petrol hike of RM0.10 for RON95. Before the price hike, his full tank would have cost him RM87.75 (RM1.95 x 45 litres). After the price hike, it would cost him RM92.25 (RM2.05 x 45 litres). So, he would have made a one-time saving of RM4.50 only.

That may just be enough for a plate of mixed rice with two dishes. Look for real ways to save instead of focusing on petty things.

Quick tips

If you are really looking forward to saving money on petrol, consider driving at a moderate speed, avoiding congested zones, or dump the car whenever you can and start walking or taking public transport.

These real money-saving tips will definitely help you save hundreds a month.

7. Malaysia is a shopping heaven

Not shopping is probably a tough thing to do for most Malaysians. With shopping malls at almost every neighbourhood, Pasar Malam, warehouse sales every weekend, cutting off spending can be truly torturous.

And this is probably the number one cause for Malaysians’ inability to save money. As Malaysians, we are always spoilt for choices, from food, entertainment or branded items. A friends gathering never goes away without an eat-out or sales never swing by without us taking advantage of that.

You can always enjoy a better television or a newer car, but splurging on the latest models can be a very expensive (and unnecessary) habit. You should only upgrade when your current item, be it smartphone or TV, is broken, not every time a newer model comes out. This is a result of the mentality that believes your money is yours to spend (now).

Quick tips

Prioritise your spending and buy according to your needs and not wants. When there is a sale, it does not automatically mean that you must buy something. Buy only if you really need something.

Anytime you must spend, think thrice if you can do without it. And the money you put into savings is the highest priority “spending” you can do. Pay yourself first, and then use what’s leftover to purchase something you want. Here are tips to help curb the temptation to spend money!

Don’t let these excuses stop you from saving for the rest of your life. If you don’t, you won’t achieve what you want. Or worse, if something bad happens, you’ll be completely exposed financially.

Identify the common excuses that stop you from saving and start taking proactive steps in overcoming your stumbling blocks. Once you have done that, you may find saving money much easier to accomplish. It may not be easy, but it is possible and it is well worth it because saving gives you peace of mind and financial independence.

Source:https://www.imoney.my/articles/7-reasons-why-malaysians-dont-save?utm_source=newsletter&utm_medium=email&utm_campaign=2015-07-09-7-reasons-why-malaysians-dont-save

The State of Savings In The United States

Savings

Bankrate came out with an updated study on the amount of money Americans are savings. The good news is that there are some Americans that are doing well with saving their money. The bad news is that way too many of us are still lacking in the money-saving department. How do you overcome this if you are in the non-saving category? I will walk you through some of my tricks that help me to save. Hopefully, you can use them to your advantage as well.

Saving 15% Of Your Income

The study found that middle-class earners were the best at saving 15% or more of their income. Here is a chart that breaks down the percentage of people in a given income range who save 15% or more of their income:

The findings shouldn’t be surprising, based on the numbers. First off, the difference in saving rates could simply be related to math. For example, if someone is that saving 10% of a $50,000 salary is saving $5,000 a year while someone saving 10% of their $125,000 salary is saving $12,500 a year. The wealthy can get away with saving a smaller percentage of their income simply because of the size of their income.

In addition to this, those earning a lot less will have a tougher time saving a larger percentage of their income. Most of their pay is going towards basic living expenses – housing, food, etc. While they still can save, saving 15% or more might be a stretch.

Saving Little Or Nothing

The scary part of the study is that 55% of 18-29-year-olds save 5% or less, including nothing for the long-term. While there are a variety of reasons for this, the overwhelming reason is probably due to the thought of retirement being in the distant future.

With new smartphones and our favorite band coming to town in the near-term, thinking about saving for an event or lifestyle that is 30-plus years away is going to take the backseat. I know the power of short-term gratification all too well. It’s what helped me to get into credit card debt at a younger age.

How To Start Saving Money Today

If you are someone who is not saving enough for retirement, or even saving in general, how do you get started? There are a few tricks I use and think they would benefit you as well.

Get A Detailed Picture Of Your Retirement: When most people see their retirement, they envision themselves no longer working. This is great, but for most of us, this isn’t exciting enough to make us want to forgo the smartphone so we can save for that future day of no longer working.

To overcome this, you need to get detailed. What exactly does retirement mean to you? Will you travel? Will you play golf? The more detailed you can be, the greater the excitement will be about retirement and the more likely you will be to start saving for it.

Understand Time: Look, I know 30 years seems like a lot of time, but time is your best friend when saving for the long-term. The more time you have, the less money you have to save. For example, imagine trying to move a boulder up a long gently sloping hill versus a short, steep hill.

For the gently sloping hill, you could probably just move the boulder yourself or even employ the help of a horse and a cart to get the boulder up the hill. But with the steep hill, you can’t move the boulder yourself and you will most likely need 5 or 6 horses to help you.

Saving for retirement is the same way. If you start now (assuming you are in your 20’s or 30’s), you can get away with saving $200 a month and still enjoy a comfortable retirement. But if you wait until you are in your 50’s, you are looking at saving a few thousand dollars a month. That’s a huge difference. Remember, time is your friend.

Automate Things: I love automating things because it works. I set something up once and I am done with it. In the future, the task still gets done, only I don’t have to do anything about it. When it comes to your finances, automating your savings is a no-brainer.

Set up a recurring monthly transfer to your savings account and you are set. There is even a service out there now that will do automatic transfers for you in small amounts repeatedly throughout the month.

Heck, you can even go with a robo-advisor and have your investing automated too! The more you can automate, the greater the odds are you will save money. This is why most companies now auto-enrol you into a 401k plan. It works.

Final Thoughts

At the end of the day, you have to save money. The tips above will help you save more money if you are struggling to save. While retirement may seem like a far way off, remember to use time as your ally and save now. The more you save now means the sooner you can take advantage of the detailed plans you have for your retirement.

Saving Tip: Save Like You’re Paying Off A High Interest Debt

Savings

I was driving down the highway on my way home from work the other day when I looked up and saw a billboard for a local bank. It had a two-sentence ad for their high-yield savings account that really caught my attention. It said:

Your future called. It said to send money

This really got me thinking about our debt culture, and how most people don’t even bother to save for their future. We value having things now, and for most people saving for the future never even enters their minds. In fact, according to MSNBC.com, the Commerce Department reported that the nation’s personal savings rate for all of 2006 was a negative 1 percent, the worst showing in 73 years. The article continues:

As the nation’s largest generation retires, that will further depress savings because typically retirees are drawing down their accumulated savings in an effort to make up the difference between the salaries they earned on the job and their smaller Social Security and other pension payments.

“We have to face the question of whether we are anywhere near where we need to be with our savings to see us through,” said David Wyss, chief economist at Standard & Poor’s in New York.

We are not saving enough for our future needs, and we need to find a way to turn that around. We need to start saving NOW!

Saving For The Future

We know we need to save for the future, but how do we start? How do we get motivated to start putting away the funds that we’ll need down the line?

I read an article on NPR.com where they were talking about debt. One of the quotes was from Financial Times columnist Tim Harford. He said:

Debt is your future self sending you money back in time. So the question is, are you and your future self both happy with the deal?

No, I’m not happy with the deal – that’s why we don’t do debt. This quote did make me think, what if this went in reverse, and it was our present self sending money to our future self?

Savings is your present self sending you money in the future.

Now that is a deal I’ll sign up for!

Dayana Yochim in her article, “Give Your Future Self a Raise” talks about how most people have been told to save 10% for retirement, but that it just isn’t enough. What does it take to turn that around? It’s pretty simple:

Save more. Work longer.  End of story.

Sounds dull, but if you get serious about those two things — work an extra two years and sock away just 3% more in savings if you can — you will turn your entire financial future around.

Saving Is Like Paying A High-Interest Debt To Your Future Self

Sometimes just saving for the future isn’t motivation enough. You need to couch it in different terms. Here’s what I’ve come up with for myself. When you have debts, the debts become a priority, you have to pay them off before you can buy the things you want like a new gadget or a vacation. If you don’t pay your debts eventually the creditor will repossess your house or other assets.

I like to think of savings as a high-interest debt that I’m paying to my future self. I have to pay myself for the future before I pay for other things because if I don’t my future prosperity will be repossessed. And I don’t want my future to get foreclosed on! Do you?

Tips To Jumpstart Your Savings

1. Treat retirement savings as a high-interest debt to be paid off.
2. Set a debt goal: Set a debt goal for your retirement savings and try to make payments on that debt as often as you can. Use the Dave Ramsey debt snowball and the concept of snowflaking to add more money to your retirement savings.
3. Save more: If you’re saving 10%, bump it up 15%. Save as much as you comfortably can. You don’t want to make your current life uncomfortable, but you do want to make sure you save enough. Check out PTMoney’s article, “7 Can't-Miss Ways to Kick-Start the Saving Habit” for more ideas of ways to start saving.
4. Work longer: Plan on working longer in order to save more. Take on part-time jobs or save other unexpected windfalls.

In my mind, the most important thing to do when it comes to saving is to just start doing it. Make it automatic, make it a habit. Turn it into a game! You’ll be happy to know that you’re paying your future self for a prosperous retirement. The billboard will now read,

Your future called, you’ve got plenty of money because you started saving!

 What are your tips for jump-starting a saving habit? Leave a comment here!

Source: http://www.biblemoneymatters.com/summer-savings-series-6-saving-tip-save-like-youre-paying-off-a-high-interest-debt/

Top Rules of Thumb For Retirement Savings

Saving for retirement

Saving for retirement can be intimidating. There are so many different plans to choose from, different investment companies to manage your plan, restrictions on who can contribute and how much, tax rules to follow, and paperwork to keep track of – not to mention investment decisions to make after you’ve gotten your plan set up. The best way to handle this complex but essential process is to break it down into small, manageable steps. With that in mind, here are the most important rules of thumb to follow when saving for retirement.

1. Start Saving Now

Ideally, you would have started saving for retirement the moment you started earning income, which for many of us was at 16 when we got that after-school job at the mall or the movie theatre or the sandwich shop. In reality, you probably needed the money for short-term expenses, like the payment on the car that got you to your job, nights out with friends, and college textbooks. It probably didn’t make sense, or even occur to you, to start saving for retirement until you got your first full-time job, had kids, celebrated a milestone birthday, or experienced some other defining event that got you thinking hard about your future. No matter what your age today, don’t lament the years you didn’t spend saving. Just start saving for retirement now. The sooner you start, the less you have to contribute each year to reach your savings goal.

2. Save 15% of Your Income 

A good rule of thumb for the percentage of your income you should save is 15%. That’s after taxes and before any matching contribution from your employer. If you can’t afford to save 15% right now, that’s OK. Saving even 1% is better than nothing. Each year when you file your taxes, you can reevaluate your financial situation and consider increasing your contribution. If you’re older and haven’t been saving throughout your working life, you have some catching up to do, and you should aim to save 20% to 25% of your income for retirement if you can. But if that’s not realistic, don’t let an all-or-nothing attitude defeat you. Just getting into the habit of saving and investing, no matter how small the amount, is a step in the right direction. See Retirement: What Percentage of Salary To Save? for detailed advice on saving.

3. Choose Low-Cost Investments

 Over the long run, one of the biggest factors in how large your nest egg becomes is the investment expenses you pay. The most common investment costs are the expense ratios charged by mutual funds and exchange-traded funds, and the commissions for buying and selling. The expense ratio is an annual percentage fee you’ll pay for as long as you hold the fund. If you have $10,000 invested in a fund whose expense ratio is 1%, your fee is $100 a year. You can find a fund’s expense ratio at an investment research website like Morningstar or on the website of any company that sells the fund. When choosing a fund, the rule of thumb to follow is the closer the expense ratio is to 0%, the better. That being said, it’s reasonable to pay closer to 1% for certain types of funds, like international funds or small-cap funds. There are two simple ways to minimize commissions. One is selecting commission-free investments. If you buy a Vanguard index fund directly through your Vanguard account or a Fidelity mutual fund directly through your Fidelity account, you probably won’t pay a commission. The other is buying and holding investments instead of making frequent trades – another good retirement strategy we’ll address momentarily. Get the lowdown on index funds and read our mutual fund tutorial if you don’t know anything about these popular investments.

 4. Don’t Put Money in Something You Don’t Understand

 If the only investment you currently understand is a savings account, park your money there while you learn about slightly more sophisticated investments like index funds and exchange-traded funds, which are the only investments most people need to understand to build a solid retirement portfolio. Don’t ever let salespeople or advisers talk you into buying something you don’t understand. They might have your best interests in mind, but they might just be trying to sell you an investment that will earn them a commission. Until you educate yourself about the different investment options, you’ll have no way of knowing. Even putting your money in a relatively simple investment like bonds can backfire if you don’t understand how bonds work. Why? Because you might make irrational, emotion-based buy-and-sell decisions based on what you hear and read in the news about how the markets are performing short term, not based on your bonds’ long-term value.

 5. Buy and Hold 

 Adopting a buy and hold investment strategy means that even if you choose investments that charge a commission, you won’t pay commissions very often. This rule of thumb also means that you won’t let your emotions dictate your investment decisions. When people follow their emotions, they tend to buy high and sell low. They hear how high a stock has gotten, and they want in because it seems like a great investment – and it is if you’ve already been holding it for years. Or, when the economy slides into a recession, people panic about how far the Dow has fallen and dumped their S&P 500 index fund at the worst possible time. Numerous studies have shown that you’re better off keeping your money in the market even during the worst of downturns. Over the long run, you’ll come out far ahead by leaving your portfolio alone through the market’s ups and downs compared to people who are always reacting to the news or trying to time the market.

 The Bottom Line 

 While there’s a lot to learn about saving for retirement, understanding how to save and invest your money is one of the most important skills you’ll ever develop. It means leveraging all the hours of research you’re doing today into years of leisure time in the future. It also means being able to take care of yourself without having to depend on another source that might not be able to provide for you, whether that’s the Social Security system or your children. Keep in mind these top five rules of thumb for saving for retirement and you’ll be well on your way to a financially comfortable future.

Source:http://www.investopedia.com/articles/personal-finance/112814/top-rules-thumb-retirement-savings.asp