Saving money without investing
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So, if you figured it had anything to do with the interest rate on a savings account compared to the ever-rising inflation rate, you were on the mark! The instance I painted earlier illustrates to a large extent the issue of saving without investing, as well as how inflation can be a real pain in the butt. The actual value of your money after saving in a traditional savings account is NGN 1,,, but the face value still looks like NGN 2 million.
Low Annual Interest Yield The low yearly interest yield on funds in a typical savings account is a major drawback. Especially if you take out a portion of your money on a regular basis. Instead, you continue to account for losses in the form of account charges, which further depletes your funds.
Investing easily overcomes all these dilemmas because your money is fixed and your return on investment, depending on the type of investment, is solid. You now understand why investing, rather than simply putting your money in a savings account, is a wise decision.
A high yield savings account is a bank account that offers a higher interest rate than a regular checking or savings account. This type of account can help you save money faster since the interest rate will compound over time.
Create a budget and stick to it Another way to start saving for retirement without investing is to create a budget and stick to it. When you create a budget, you are essentially creating a plan for how you will spend your money. If you are not currently following a budget, then it is time to get out the pencil and paper and start writing everything down.
This will allow you to see where your cash goes each month, which can help you identify problem areas. Once you have identified the problem areas, take some time to create a reasonable budget that allows you to save money. This is the key to saving and, in this case, building retirement savings. Set up an automated system to save money, taking the weakest link — you — out of the decision-making process. If you make saving for retirement a priority and automate it, your savings will start building themselves.
You will also need to be conscious of how you spend the rest of your money against short, medium and long term needs. Invest in yourself Invest in yourself as your greatest asset. When you invest in yourself, you are essentially buying something that will help you grow personally or professionally.
For example, if you want to learn a new skill or gain some knowledge about a certain topic, consider taking a class online or at your local community college. You could do any of the below to increase your current or future earnings or lifestyle. Books Courses Coaching or training By investing in yourself, you can increase your chances of success in your health, wealth and happiness. Contribute to a tax-advantaged accounts Tax-advantaged accounts where you avoid tax or get the tax back are a great way to build savings.
These can include savings accounts where you earn interest tax-free or retirement savings accounts where you might get the tax back you have already paid. These types of accounts are dependent on where you live in the world and what your country has on offer or allows but are definitely worth considering in your retirement savings plan.
Just be mindful that the interest rates on the account may not be keeping pace with inflation. Open a retirement account with an automated savings plan Open the types of accounts I mentioned above if you want to save money and not worry about it. You can contribute to these special accounts on a regular basis, which will allow you to accumulate quite a lot of money over time. Additionally, the automated savings plan will do most of the work for you! Start a side hustle you never want to retire from Another way to start saving for retirement without investing is to start a side hustle.
When you have a side hustle, you will be able to save more money for retirement and enjoy yourself at the same time. Just be sure to put aside some of the extra cash so that it does not interfere with your life too much. If you are struggling for ideas for a side hustle, these questions might help with a few ideas What are you good at? What do you like doing? What does the world need? What will people pay you for?
It is pretty difficult to stay active in the workforce when you are older, but there are some people who do it every day. If you want to continue working on a full-time or part-time basis after you retire, then consider keeping your job throughout your entire golden years.
This will allow you to retain a sense of normalcy in your life and save quite a bit of money. Do not retire How about never retiring? This might seem like a strange solution, but it can be extremely beneficial if you want to keep working after becoming eligible for Social Security. And by working during your later years, you will be able to continue to save for retirement without investing.
Keep an eye on your expenses and make cuts where necessary. You might not know it, but there are probably many areas in which you can save money. Make a budget and see where you can spend less so that you have more disposable income to invest across the different areas of your life.
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