Technically, it's not too late to save $1,000.
After all, 2021 is still starting.
In fact, if you're reading this story, you're probably in your teens or 20s. That means you have decades to save for the future, and that's a good thing.
Looking for a quick way to get started on this year's savings? We got you.
Here are five strategies that will make 2021 great for your bank account:
Start investing ASAP.
Investing in a Roth IRA or traditional IRA is a great idea because you can put money in each year and not worry about taxes until you withdraw money in retirement.
If you haven’t heard of the Roth IRA, it is a retirement investment that allows you to put money away tax-free and withdraw it without paying any penalty at retirement. If you think of your piggy bank, the Roth IRA is similar in that you put money in by saving and investing, but instead of taking your money out when you need something specific like a new car, you take it out when you need money in general (in the future), as long as you meet the qualifications.
The average person has $3,500 in a retirement account. However, according to T. Rowe Price’s 2016 Retirement Savings survey, that’s not even the amount you need to be saving by age 55 to maintain the standard of living you have now, which is approximately $42,000 a year. So for context, that’s what a lot of people are trying to save every year.
The sooner you start investing, the more time your money has to grow tax-free.
Max out your 401(k).
Learn about the benefits of saving in a 401(k) and contribute enough so that your employer's matching contributions maximize your contributions.
If you have a 401(k) at your employer, you should contribute as much as you can, up to the amount of your company’s match.
Make no mistake: There’s no better way to save for your future than making the maximum contributions to your 401(k).
If you have to choose between contributing more to your 401(k) or maxing out an IRA, go with the 401(k), since those contributions are tax-deductible.
Track your spending.
Start taking note of all your purchases, big and small. This practice is the first step to understanding where your money is going.
Now is the time to download a personal finance app or spreadsheet and get started. After all, it's not going to miraculously save itself. The initial time investment is well worth it for the long-term payoff.
Look for opportunities for side hustles. Having something else outside of your work can give you some extra funds to stash away.
A side hustle is a great way to make extra money, but the most common mistake we see at PennyMize is people making their side hustle more complicated than it needs to be. At the end of the day, if you're thinking about starting your own side hustle, you just need to be smart about how you can sell your skills to customers and earn more money.
Here are two examples you can try yourself :-
1. Be the Host
Hosting is one of the easiest ways to make some extra cash. You probably have the space to host a get together (or two) a month. For example, I hosted a book club at my house, which meant making snacks and tea for an hour and a half. While I did not keep all of the snacks, I did keep a percentage of the potluck. Hosting can be lucrative if you think creatively. If you have a remote job or are self-employed, you could also host conference calls. You'll get the same benefits as hosting a dinner party, but get your work done at the same time!
2. Become an Assistant
Do you have organizational skills? Can you deal with customers over the phone? If yes, you may have what it takes to become an assistant. This is especially true if you're looking for experience for your resume.
Daily life and shopping habits
There are ways to save $1,000 a year that can easily be incorporated into your daily life and shopping habits. By taking small steps towards savings, you’ll have more cash leftover at the end of every month. Here are five strategies that can help you save $1,000 in 2021:
1. Shop at discount stores
2. Reduce your cable bill
3. Shop for groceries online
4. Use cash when you shop
It’s no secret that making money in your 20s is difficult. Between job hopping, mastering your internship, and paying for rent, going out, and groceries it’s hard to stay on top of the financial game. For those who are just getting started it’s even more of a challenge.
Putting together a financial plan for your 20s should be a priority if you want to live comfortably in your 30s and beyond. Being able to pay of debts and save enough for a solid financial foundation impacts how comfortable you are later on in life.