Thrift Savings Ideas for the Future

Every penny counts in your investments.

Saving money is tough, and getting started can often be the hardest part. Learning to budget money effectively is the key to financial stability, and investing effectively is one of the best ways to build for the future. Investors can use a number of savings and investment vehicles to find money today and build toward a more financially secure future.

Building a Budget

Before you can institute any thrift savings ideas and start building for your future, you first need to get a handle on your present. By building a comprehensive budget for your household, you can find the extra money you need to put aside and start investing wisely. One way to get a handle on just how much you are spending is to carry a small notepad with you every day. Record each purchase you make, no matter how small, then scrutinize that list carefully and look for ways to save.

Direct Purchase Stocks

It can be difficult to get started with stock market investing, especially if you do not have a lot of money to work with. One solution to that problem is direct purchase stocks. Many companies have programs in place that allow investors to purchase shares directly from the firm, without paying a brokerage commission. Investors can also choose to make periodic investments to build up their portfolios and grow their positions. Over time, those stock purchases can grow into a solid portfolio.

Workplace Retirement

If you have access to a 401k or 403b plan where you work, contributing as much to it as you can is generally a smart move. Putting money aside in a 401k or 403b saves you money on taxes right away, while the funds you set aside grow tax-deferred all the way out to retirement. In addition to the short-term and long-term tax breaks, many employers offer matching funds, so not contributing is like turning down that free money.

You can make your 401k or 403b even more powerful by signing up for the automatic escalation plan. This plan automatically raises the percentage you contribute each year, helping you save even more for the future.

Mutual Fund

Investing in a quality mutual fund is a great way to get started with investing. Many mutual funds allow you to get started with just a few hundred dollars if you agree to contribute each month by transferring money directly from your bank account. Transferring money from your bank account to a mutual fund also instills fiscal discipline by forcing you to live on less than you make. Over time, that financial discipline can be just as valuable as the mutual fund itself.

References

• Employee Benefit Research Institute: The Expected Impact of Automatic Escalation Plans
• McDonald's: Direct Share Purchase Program