Here Are Ten Strategies To Save Even More Money If You’re On A Fixed Income.
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Table of Contents
Introduction
Every dollar counts, especially if you’re living on a fixed income. Whether it’s utilizing an online bank with a better yield, cutting the cord on your cable, or using modern budgeting tools, every dollar counts.
Millions of baby boomers are also faced with the daunting task of managing their retirement funds in a low-interest climate.
Here are ten ways that persons on a fixed income can make the most of their money.
Creating A Budget In Order To Save Even More Money
Living on a fixed income limits your earning potential. Budgeting is one strategy to potentially enhance the amount of money you can put toward savings. Making a budget may make it easier to identify areas where you may save money.
“You’d be surprised how many people have monthly recurring subscriptions that they don’t utilise,” says Tim Kenney, a certified financial advisor at TK Pacific Wealth. Kenney claims he did it himself and discovered five or six subscriptions that he simply cancelled. It’s more crucial than ever to review these documents, as many people’s shopping and entertainment habits have altered since the outbreak.
Subscriptions to gyms, streaming services, software, and other monthly or annual subscriptions are all likely to come up throughout the budgeting process. The money saved can be used to pay off debt, save for an emergency, or achieve another key financial objective.
Make Use Of Technology To Keep Track Of Your Spending
Some people appreciate a little financial assistance. There are also numerous budgeting tools that can import your previous costs and show you where your money is going.
Others may wish to keep their financial transactions between themselves and their bank. In such scenario, you can assess and plan your expenditure with a simple piece of paper, a spreadsheet, or a home budget calculator.
It’s arguably the best moment to track your expenditure because there are so many products and solutions accessible.
Make A Budget For Your Expenses
Sure, you’ve been with your insurance provider for a long time. Is it, however, truly offering you the finest deal? You won’t know unless you compare it to the competition on a regular basis. You might be able to save a lot of money for roughly the same coverage.
Examining your cable bill is the same way. Cutting the cord and instead choosing one of the several streaming options available could result in big monthly savings.
Debt With A High Interest Rate Should Be Paid Off First
Getting rid of credit card debt can help you save more money. In this low-interest climate, the difference between paying 16.28 percent annual percentage rate (APR), the national average variable APR on credit card purchases and a high-yield savings account will be significant.
According to Experian, the average credit card debt for baby boomers was $6,949 in 2019. Paying off the debt, using a balance transfer offer on an existing credit card, or getting a balance transfer credit card can all help you get out of debt.
Look For A High-Yielding Savings Account
Today’s competitive yield isn’t the same as it was a few years ago. According to a survey published in May 2019, roughly a quarter of Americans were not receiving any interest on their savings. Even though rates have altered since then, zero is still zero unless those individuals have changed their minds.
Keep Your Cash Secure
Nobody wants to be in a position where they are unable to make a profit. Those on a fixed income, on the other hand, must ensure that their money is maintained safe. A savings account with the Federal Deposit Insurance Corporation (FDIC) ensures that your money is safe. Just make sure it’s within the insurance limits and criteria set forth by the FDIC.
Depending On Your Age, Consider Other Choices Such As Investing
People on a fixed income aren’t always at the traditional retirement age. According to Patti Hughes, certified financial planner and CPA, principal of Lake Life Wealth Advisory Group in Chicago, younger retirees in their mid to late 50s should keep more invested in the market.
“They have all that time to increase their assets,” Hughes says. “I think it’s incredibly important for whoever it is to look at what their time horizon is.”
For younger persons on a fixed income, index funds or mutual funds may be viable solutions. According to Hughes, a consumer might want a product that is 70% invested in equities and 30% in bonds.
Consider Using Interest Checking To Increase Your Yield
It’s fair that when you think of checking accounts, you imagine you won’t be generating any interest.
However, for a large yield, there are a few checking options worth considering. They may even offer a larger return than an online savings account. A capped APY that is only eligible for a particular sum is often the catch with these interest checking accounts. Money that exceeds that balance is likely to earn a much lower interest rate.
In order to earn that high APY on balances below a specific level, these products may also demand a certain amount of debit card transactions per month and/or a monthly direct deposit.
To Diversify Your Longer-Term Savings, Use A Cd Ladder
All you have to do is go back a year to see how beneficial a CD ladder can be to your savings strategy. A few years ago, you could get a two-year or three-year CD with a 2.5 percent annual percentage yield. Those yields are no longer accessible, but later this year, you might be satisfied with the current CD yields.
In this low-rate climate, a short-term CD ladder is definitely the best solution. Of course, the objective for the money and the time frame in which you’ll need it should play a role in this selection.
Add A No-Penalty Cd As A Stop-Gap Measure
A no-penalty CD is a good option for those who appreciate the notion of a fixed-rate CD but also want the flexibility of being able to withdraw from it. These are comparable to the highest-yielding savings accounts.
Despite the fact that savings and CD rates have been continuously decreasing for years, there is a chance that they will rise this year. A no-penalty CD, on the other hand, would make sense for some short-term savings.
There Are Still Ways To Save Money And Earn Interest
Even if you have a fixed income in a low-rate environment, there are still some solutions available. You can make sure you’re maximising your savings by cutting expenses and ensuring you’re getting a competitive rate in the present economy.
Modest triumphs, such as reducing a monthly expense or earning a small amount of money, pile up over time.
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Adam is an internationally recognised author on financial matters, with over 760.2 million answer views on Quora.com, a widely sold book on Amazon, and a contributor on Forbes.
