When you are saving money, it is typically for two purposes. There is long-term savings, which typically includes your retirement savings and a college fund for your children, and there is short-term savings, which includes an emergency fund and large purchases you may be saving for, such as a dream vacation or a car. It is easier to realign your goals to boost your short-term savings, but it’s important to revitalize your long-term savings plan along the way as well. Here are five common steps you can take to boost your long-term savings.
Give yourself a raise
When you get a raise or bonus at work, direct some of that extra money into your retirement savings. For example, if you get a 3 percent raise, you might boost your 401(k) plan contributions by 1 percent. Or, if you get a one-time bonus of $5,000, you might start or add to an individual retirement account. Giving your retirement savings a boost whenever you get extra money ensures your savings rate keeps up with the times.
Expand your horizons
If you can afford it, save more for your retirement by branching out into other accounts. If you are putting an amount you feel comfortable with in your 401(k), start a traditional or Roth IRA. If you have a high-deductible health insurance plan, start a health savings account. You could even put some money into a whole life insurance policy.
Change with the times
Whenever the government gives you an opportunity to save more, you should do so. For example, the federal government periodically raises the contribution limits to IRAs, HSAs and other accounts, and if you can afford to, you should take advantage. There also are period changes to maximum income limits that you also may be able to take advantage of.
Shift your priorities
As you get older, you can change the priorities for your money to boost your long-term savings. For example, once your kids are grown and out of the house, it should free up more money to put toward retirement savings. If you pay off your mortgage, that is additional money freed up. If you put as much of this money toward long-term savings, you will be in good shape.
If you cannot save the amount of money you want no matter how hard you try, it may be time to cut expenses. Look at cutting or reducing things you don’t use often or at all, such as cable TV or gym memberships. You can also look at things like increasing insurance deductibles to cut down on your premium cost. Most people can find some extra money to save by making a few cuts.