If there is one thing we all could do more of, it’s likely this: save money. With raging inflation and fears of a looming recession jolting the American economy, saving money is top of mind for many. But the reality is that saving money is much easier said than done – especially when it comes to retirement.
The good news is that it’s never too late to start saving – even if you’re already retired. All it takes to get started is a bit of planning and some dedication. And what better motivation than by celebrating National Savings Day itself?
Celebrated annually on October 12, National Savings Day was founded by Capital One in 2017 to empower people to build their savings. It’s a great reminder of the importance of building your nest egg to help weather any financial storms or unexpected expenses. When it comes to spending and saving, even small changes in our habits can make a big difference. Consider these savvy tips to observe National Savings Day and ramp up your savings in the process!
Start by Tracking Spending
Before you can begin bolstering your savings, it’s important to assess your spending habits to gain a better understanding of where your money is going. There are plenty of simple ways to track your spending that will help you smarter manage your money. Many banks offer online banking apps that automatically track each purchase made with your debit or credit card. These purchases are often categorized into areas such as travel, dining, and entertainment, so you can get a bigger picture of the categories you spend most on at a quick glance.
You can also go the traditional route – writing down all expenses. Grab a notebook and track every purchase you make over the course of a month – don’t forget to include monthly bills, groceries, gas, and miscellaneous purchases. At the end of the month, review your notes, total up your expenses, and see the results for yourself! Finally, you can experiment with budgeting with cash. Divide your income into expense categories for the month, each in a designated and labeled envelope. You’ll gain insight into the areas you may be overspending in based on how quickly you deplete the cash in each envelope.
Pay Attention to Potential Bargains and Discounts
What’s one of the best perks of getting older? Two words: senior discounts. You’ve earned it – so why not take advantage of these potential savings opportunities? An often-well-kept secret, senior discounts are available anywhere from retailers to restaurants to movie theaters, and even travel destinations, like national parks. And to redeem these discounts, often times, all you have to do is ask! While discounts are subject to change, it’s a smart idea to check with your favorite retailers for their latest savings opportunities. Plus, senior discounts often vary by age – so you may be able reap the savings as early as age 50! And for stores or restaurants that do not offer senior discounts, be sure to leverage deals websites that scour the internet for the best coupons and promotional codes.
Sell Items You No Longer Need
As we age, we realize just how many items, keepsakes, and supplies we’ve accumulated in our homes. Odds are, many of these items we no longer use. Why not sell them? Identify items around your house you no longer need or want and set them aside. From there, you can post them online to be sold. From social media sites like Facebook Marketplace to ecommerce sites like eBay and OfferUp, there are plenty of ways to make some quick cash just by parting with the items you no longer need. As a result, you’ll enjoy some extra cash – and a decluttered house. How’s that for a win-win?
Revisit Your Memberships and Subscriptions
When it comes to cutting expenses and saving money, an obvious tip is, “don’t pay for things you don’t use.” And this is especially true when it comes to memberships and subscriptions. With recurring payments being automatically withdrawn from our bank accounts on a regular basis, it’s easy for subscription expenses to become out-of-sight and out-of-mind. In fact, according to a Chase survey, two-thirds of consumers admitted to forgetting about at least one recurring payment they’ve set up in the last year.1
Don’t let your money go to waste – take inventory of your memberships and subscriptions, and make sure you are, in fact, using them. For instance, are you going to the pool or gym frequently enough to justify the membership costs? Do you have time to read all the newspapers and magazines you subscribe to? Do you still need that streaming service you signed up for to watch the latest docuseries? By analyzing your accounts and usage, you can identify places to save.
Save Money at Home
There’s no place like home – but it’s no secret that our homes come with their fair share of expenses. After all, it takes a lot of energy (and money!) to comfortably heat and cool a home, among other utility costs. Fortunately, there are ways to save. Consider opting for a programmable thermostat that can be automatically adjusted when you aren’t home, so you can avoid paying to heat or cool the house unnecessarily. You could also save on cooling by installing solar screens that block up to 70% of the sun’s rays and relying on fans to cut back on air conditioning usage. You should also identify any potential air leaks in your home, as these can make your HVAC units work even harder. Sealing windows and doors can save you an average of 15% per year on heating and cooling costs, according to the EPA.2
Let Your Home Pay You
While your home is one of your biggest expenses, it’s likely also one of your biggest sources of wealth. With seniors aged 62 and older now accounting for over $12 trillion in home equity, you may be surprised to find out just how much wealth is built up in your home.3 Converting a portion of your home’s equity into cash with a Home Equity Conversion Mortgage (HECM) – also known as a reverse mortgage, could provide a welcome source of cash flow to supplement your retirement nest egg.
How do Reverse Mortgages Work?
While traditional mortgages require you to may payment toward your loan balance every month, reverse mortgages – as the name suggests – are the opposite. By tapping into your equity, you’ll receive payments – either via a one-time income tax-free lump sum,4 steady income tax-free monthly disbursements,4 a line of credit as a “safety net” for later use if needed, or any combination of these methods5. And with a reverse mortgage, monthly payments are optional, so long as you continue to keep up to date with taxes, insurance, and home maintenance. As such, you can free up even more cash to be used as you wish.
Since the equity drawn from a reverse mortgage is yours, the money can be used however you see best fit. Whether it be to keep more money on hand to pay for everyday bills and, set aside funds for the future, or make updates, repairs or modifications to live more comfortably, the possibilities are truly endless. And with a reverse mortgage, you can avoid making taxable withdrawals from 401(k) or other retirement savings plans by replacing the money with income tax-free funds.4
Over 1.3 million Americans have already made a reverse mortgage part of their financial plan6 – is it time you do the same? To learn more about leveraging home equity or to see if a reverse mortgage is right for your financial situation, contact the Longbridge team today.