It sure would be nice to have $50K in your savings account right now.
Maybe you are already there and would like to double that amount. Chances are you did the correct moves and made some smart choices to get your balance up to that figure.
Or perhaps you’ve never seen that number and dollar sign together when it comes to your savings.
Either way, there’s lots of tips and tricks for adding money into your personal piggy bank.
GOBankingRates spoke to some experts in this field, and they have covered a few financial moves that the average person shouldn’t make until they have at least $50K saved, as well as some insights on how to get there in the first place.
1. Relocating
Thinking of relocating? You might want to think again, as a move might put a strain on or drain your account that you’ve been saving funds in for a while.
“When you’re moving outside of an employer-funded relocation, out-of-pocket costs can get extremely high,” said Fo Alexander, a personal finance educator with Mama & Money. “This is particularly true when you are relocating to another coast–averaging as high as $15,000.
The reason is that no matter what, with moving there are always unexpected expenses.
Alexander cites the examples of “delayed deliveries, unplanned storage, and temporary housing due to schedule changes. Each of these things will require more cash than expected. So having at least $5K set aside to help buffer these costs and not leave you in a financially compromised position is ideal.”
2. High-Risk Investments
“Avoid high-risk investments until you’ve built a solid financial cushion,” Kellzi explained. “These investments can be volatile, potentially leading to substantial losses, which you might not recover from without adequate savings.”
“I would avoid real estate investing outside of your primary residence,” added Alexander. “This is a capital-heavy investment you should have ample savings for to mitigate risks. Having $50k set aside will ensure that you can sustain your current household expenses if something were to happen. It should also suffice for any unexpected expenses incurred when managing another property.
3. Luxury Purchases
A new car? House? An international resort-based trip for you, your family, and your friends? You might be tempted to buy all of these in a laissez faire attitude-live for today and save later. But that could come back to haunt you and your finances in the long run.
“Steer clear of expensive luxury items or vacations. Instead, focus on frugal living and allocating your resources towards savings and investments that will appreciate over time,” recommended Kellzi.
4. Taking On New Debt
“Avoid accumulating new debt, especially high-interest credit card debt,” Kellzi said. “Prioritize paying off existing debts to reduce interest payments and free up more of your income for savings and investments.”
Instead, it’s more important to take care of the debt you already have, whether it be the last of a student loan payment or the monthly bill on your mortgage.
“Get out of any unneeded debt first,” Mohr suggested. “Reduce your financial burden by prioritizing the repayment of your high-interest bills. To continue adding to your money, put off making any major purchases for the time being. Instead, you should prioritize frugal expenditure in order to make consistent headway toward your objective.”
5. Lifestyle Inflation
Congratulations — you got the job! Scored the big account. Asked for a raise, and your boss gave it to you. It’s time to go out and spend that newfound moolah.
But wait, you might want to rethink spending the theoretical money you don’t have saved up already.
“Resist the urge to increase your expenses with every pay raise,” said Oleg Segal, CEO and founder of DealA. “Instead, adopt the ‘save-first’ ideology and direct a portion of any incremental income straight to savings. Avoiding unnecessary expenses will help you accumulate savings more efficiently.”
Speaking of jobs, make sure you don’t quit your current one if your goal is to save $50,000, at least not without new employment lined up elsewhere at an equal or greater salary than your previous position.
“Quitting your job without another viable source of income secured is risky,” Alexander explained. “Although having $5K saved could temporarily ease the financial burden (along with other adjustments), anything below it would be financially irresponsible. Though many have quit with less, it isn’t something that I would advise. Instead ensure that you have several months’ worth of expenses covered and another source of income to tap into.”
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