Saving for retirement is difficult so many employers have provided retirement plans to their employees, with the most popular being the 401(k) plan.  A 401(k) plan is a defined-contribution plan, where you make regular contributions into an account that you own and make all of the investment decisions for.  401(k) plans allow people to finance their own retirement and have sole authority over the decisions that will affect their future.

Employer-sponsored 401(k) plans are one of the best places to save for retirement because many employers match your contribution up to a certain amount, giving employees a guaranteed return on their money.  There is also numerous tax benefits associated with these plans, including allowing employees to make their contributions on money that has not yet been taxed, reducing their taxable income by the amount contributed.

Saving in a 401(k) plan is simple.  You decide the amount to contribute, typically 3%-10% of your salary, and the amount to contribute is automatically deducted from your paycheck each pay period.  Contributions are held in your account and are invested in mutual funds chosen for the plan by the company.  Most companies will have a wide selection of different mutual funds to choose from reflecting differing levels of risk and the employee picks which mutual fund to invest the money in their 401(k) account in.

The maximum contribution to a 401(k) plan is $16,500 annually.  Individuals that are 50 or older can contribute an additional $5,500 to their 401(k) plan as a “catch-up contribution.”  The money in your 401(k) account will grow tax-free, but tax penalties will be charged on all withdrawals from the account made before you reach the age of 59 ½.  This penalty fee is generally 10% on top of ordinary income taxes on the money withdrawn.   To avoid the penalties, the money in your 401(k) account should be left alone until you retire.

Retirement plans differ from company to company, but most medium-sized and large companies offer 401(k) plans.  Certain employees of public schools, hospitals, and certain tax-exempt organizations offer their employees 403(b) plans and government employees are offered 457 plans, both of which are very similar to 401(k) plans.  Most companies have phased out their pension plans due the high costs of the plans, so most people need to think about financing their own retirement.

If you’re already doing a 401K, you might plan on adding an IRA to the mix. The Lending Club IRA is a great option. Some are concerned about Lending Club, but there is no Lending Club Scam. Lending Club has a B+ rating from the Better Business Bureau and is regulated by the SEC.

Saving money is not a common habit and many people have to really work hard to ensure that they are saving as much as they intend.  This is especially true for those who live under a tight budget and do not have much flexibility when it comes to saving.  There are some habits that are easy to implement that will help you stay on track with your savings and making these habits regular will help you improve your financial future.

Use Auto-Deductions

The widespread use of computers and the internet has made it easier than ever for individuals to automate their deductions from their checking account to their savings account.  The amount that is transferred can be set at any amount the account holder desires and the amount can be adjusted at any time simply by logging on to the account online and changing the information.  Auto-deducting your savings from your checking account is a good habit to get into because it allows you to save without having to think about it.

Aim For A 10% Savings Rate

You should be saving at least 10% of your income for emergencies and large expenses that will need to be purchased in the future.  Although this can seem like a significant amount to individuals that are living paycheck to paycheck, these savings can easily be realized by examining your finances and finding one or two routine purchases to eliminate from your monthly spending.  Having 10% of your income going into your savings account on a regular basis will help your savings grow quickly and provide you with a nice cushion against emergencies.

Pretend Your Savings Do Not Exist

Your savings account will never grow if you keep making withdrawals from it and spending the money on things that you probably do not need.  Money should enter your savings account easily and automatically, but should go through a long and careful review process before any money is removed from the account.  The best way to make sure that your savings will grow is to leave the money in your savings account alone and allow the interest to accumulate over time.

Saving money is a difficult task for many people.  Every day, consumers are bombarded by commercials that show them hundreds of products that claim to make their lives easier and are seduced into spending more than they can afford on things that they do not really need.  Turning this spending into savings is simple to accomplish by following some easy saving solutions that reduce the amount of money spent on unnecessary items.

Review Your Expenses For Pointless Purchases

Many people have expenses that are more of a habit than a necessity, such as a daily cup of specialty coffee or ATM fees for using the ATM closest to home.  Eliminating these purchases, which provide you with little to no benefit, can help you save hundreds of dollars each year.  To find these hidden money wasters, keep track of everything that money is spent on for a period of two months so that you can see where your money is going and where spending can be trimmed.

Eliminate Expensive Entertainment

Entertainment expenses are some of the biggest expenses of any household budget and spending more than can be afforded on entertainment is a fast way to find yourself in debt.  Review your cable package and honestly judge your viewing habits to see if downgrading or eliminating the package would be a good way to save some money.  Instead of spending tons of money viewing first run movies at a movie theater, rent a movie or purchase a movie at a DVD reseller and pay a quarter of the cost.  There are many different ways to save money on entertainment and the methods chosen will depend on which forms of entertainment the individual enjoys.

Conserve Energy

Restricting and reducing your energy usage is an easy way to see significant savings in a short period of time.  Restrict driving to necessary errands to save on gasoline.  Turn off the lights in the rooms you are not using to reduce the amount of your monthly energy bill.  Replacing the weather stripping and seals around your home is also a good way to conserve energy and lower your heating and cooling costs.  Simply reducing the amount of energy used on a daily basis with these methods can save you hundreds of dollars each year.

Buying things that we really do not need can create a host of financial problems, including becoming saddled with unmanageable debt.  Spending money on unnecessary items is almost the same as throwing the money in the trash can and will result in less financial security and a cluttered home full of stuff that is rarely used.  Spending wisely should always be a priority and having money in the bank does not mean that you need to spend it.  Here are some tips for curbing unnecessary spending and keeping more of your money in your bank account.

Avoid Peer Pressure

Peer pressure often seems like something that happens to middle-school students with weak willpower, but the truth is that adults are not immune to peer pressure.  Adults tend to match the spending of the people they are frequently in contact with, an act often referred to as ‘keeping up with the Joneses.’  This happens not because you desire the object, but because you want to fit in with the crowd and have the same things that they have so that you do not feel inferior.  Avoiding peer pressure when shopping, either by shopping alone or by training yourself mentally to avoid frivolous spending, can help you stay within your budget and avoid spending more than you can afford.

Purchase Generics And Store Brands

One of the biggest mistakes people make with their finances is believing that a higher price equals a better product.  This is often not the case.  Many brand name products have a higher price because you are also paying for all of the media advertising and endorsement deals the company has made to promote their products, not because the materials used to create the product are better than what other companies use.  In most cases, there is very little discernable difference between a brand name item and its generic equivalent so you can save a lot of money by purchasing generic items without sacrificing quality.

Break The Habit Of Impulse Purchasing

Purchasing items on impulse while in the store is a fast way to break your budget with unnecessary purchases.  Most impulse purchases are of things that you do not need and are often items that the store sells at a high markup.  By making a shopping list before you travel to the store and following that list while in the store, you will ensure that you are only spending what you intended and what you can afford.

Saving enough to be able to handle the unexpected expenses that occur in life can be very difficult for many people.  They may not make a lot of money and believe that they cannot save a significant amount or they may be dipping into the funds of their savings account to pay for other expenses.  Saving money can be accomplished by anyone at any income level, as long as they are dedicated to creating a saving system and following it until their financial goals have been reached.

Reduce Unnecessary Expenses

Most people have things that they spend money for on a regular basis that they could eliminate from their budget and never miss.  Instead of purchasing lunch at a casual restaurant or fast food kiosk each workday, try taking your lunch with you and pocketing the $6 or more spent each day.  At the end of the year, you will have saved over $1,200 simply by changing your eating habits and taking your lunch with you to work.

Inexpensive Entertainment Options

Cable television is one of the biggest household expenses and many people do not watch enough to justify all of the channels purchased.  Movies and DVD box sets of television shows can be purchased fairly inexpensively at a number of stores that specialize in reselling used media items.  If you are only watching a few hours of television each day, consider eliminating expensive cable and investing in a DVD collection of shows and movies you enjoy.

Conserve Energy

Energy bills can take a large bite out of available finances.  By using some simple energy saving methods, such as replacing old weather stripping, turning down the thermostat a, or turning off the lights when you leave the room, you could be saving hundreds of dollars on your energy bills every year.  The price of gasoline has skyrocketed in recent years but by carefully planning your day, you may be able to reduce the amount of miles that you drive and the amount of gasoline consumed.  Plan errands for the drive home from work so that you are not making a separate trip to save gasoline.

Buy Store Brands And Generics

Many people purchase brand name items, not because they are better, but because that is what they have been programmed by commercials to do.  Many store brands and generic items are just as good as the name brand items, but cost a lot less because you are not paying for the name and the advertising associated with the product.  The price of these off brand items is typically 30% less than those of comparable name brand items, which is a lot to pay for brightly colored packaging and flashy commercials.

Many people have protested the practices of credit card companies that cost consumers hundreds of dollars more than they believe is fair.  The displeasure of the public has become so loud about these practices that Congress created the Credit Cardholder’s Bill Of Rights to reduce or eliminate practices that could be considered predatory.  There are many things that you can do on your own to save money on your credit cards and implement these measures has the potential to save you hundreds in credit card fees every year.

Pay Bills As They Arrive

To avoid considerable fees to your credit card account, it is better to make payments as soon as you have received the bill.  This ensures that your payment will not be received late.  Late payments give credit card companies plentiful opportunities to charge you more money, including skyrocketing the interest rate for the card to the highest allowable limit that is often close to 30%, late payment charges that could be as high as $39 per occurrence, and over-limit fees, which could add another $39 charge to the balance of the account.  A single missed or late payment could cost the person $80 or more in fees and interest rate hikes.

Keep Usage Minimal

Although the temptation to place purchases on your credit card can be very high, going this route will cost the person a large amount of money.  In addition to the interest charges and finance charges, there is a good chance that the person will spend more than they can afford to repay, will go over their credit limit triggering additional charges, or will carry a balance on the card which allows the company to charge high fees for using the credit card.  The best way to use a credit card is to use the credit card for emergency purchases only and to pay cash for everything else.

Pay Off Your Balance Monthly

One of the easiest ways to save money on your credit cards is to never charge more to then than you can pay off each month.  Carrying a balance on the credit card will result in finance charges and interest fees that can add a significant amount to the amount that will need to be paid off.  These charges cannot be levied before a certain period of time has passed, so paying off the credit card in full before these charges are levied results in an interest free loan for the month.

After the stock bubbles and housing busts of the last few decades, it is no wonder that many people are feeling insecure about their financial future.  In order to make sure that you will be able to handle any financial emergencies that occur in the future, it is important to ensure that you will have enough in your savings account to pay for the issues that arise.  The simplest way to make sure that the balance of your savings account grows quickly is to pay yourself first whenever you are paid money.

Paying yourself first is one of the secrets of financial success and can be done automatically without any thought or effort.  Most of the people that are good at accumulating wealth know this secret and practice it all of the time, saving a percentage of each paycheck or payment made to them to ensure that their savings account will continue to grow.  Prior to paying any bills or making any purchases, they make sure that they have placed the required amount into savings first.

Practicing The Rule

Many businesses give employees the option to split their direct-deposited check into up to three different bank accounts to help them deposit money into their savings account automatically each pay period.  This prevents you from seeing the money in the bank account that you use for spending and removes the money from your spending allowance so that it cannot be spent without the hassle of moving it back into the account that you use for spending.  It is a simple method that can relieve financial anxiety and help you secure your financial future.

Reasons For Saving

This method can be used for any type of saving you desire, not just for your emergency saving account.  Many people have a percentage of their paychecks direct deposited into accounts for their child’s college fund, a down payment for a home, or an individual retirement account.  Because it is such a quick and simple way to save, the technique can be used for virtually any type of saving need, even for investing accounts or large purchases that will be occurring within the next few years.

Creating A Plan

When setting up a savings plan, it is important to take into account what you are saving for and how long you intend to save for it.  If the savings are being diverted to an emergency savings account or retirement fund, then you should plan to allow the funds to accumulate for a long time without withdrawals and place at least 10% of your earnings into the account.  If the money is being saved for a particular need, then the best course of action is to determine how much money will be needed to make the purchase and divide the cost by the number of months before the purchase will be made.  This helps you obtain a dollar figure for how much you should be saving each month to make that purchase on time.

An important part of successful financial planning is planning for retirement and the earlier you begin, the better off you will be.  There are a wide variety of investment opportunities available to choose from for retirement planning with one of the most popular being the Roth IRA.  Since its introduction in 1998, the Roth IRA has offered investors a tax-free investment vehicle that they can use to save for their retirement years.  There are a number of advantages and disadvantages to Roth IRAs and knowing what they are will help you make the decision of whether a Roth IRA is the right investment for you.

Roth IRA Advantages

One of the biggest advantages of a Roth IRA is the simplicity of setting up the account.  Most people are able to provide the information required for a new Roth IRA within minutes and can set up their account with minimal effort.  There are a wide range of options for investing the money contributed to the account and the account holder is not penalized for withdrawing funds that they have contributed to the account before the age of 59 ½.

Account earnings up to the amount of $10,000 can be withdrawn from the balance of the account to assist with the down payment for a home, as long as the home will be your primary residence.  You can elect to have the Roth IRA transferred to a beneficiary in the event of your death and the beneficiary can combine that account with his or her own Roth IRA penalty free.  With a Roth IRA, you do not have to start taking money from the account once you have reached a certain age and can save the money in the account for as long as you desire.

Roth IRA Disadvantages

One of the biggest disadvantages to a Roth IRA is the strict income limitations that must be adhered to open and maintain an account.  If you do not meet the income limitations, you will be unable to open a Roth IRA and if your income increases past the limit, you will no longer be able to contribute funds to the Roth IRA.  Roth IRA contributions are taxed on the front end and do not reduce your adjusted gross income for the year like regular IRAs and other retirement plans.

Annual contributions to a Roth IRA are capped at $5,000 per year for individuals that are under the age of 50 and are capped at $6,000 per year for individuals that are 50 years old or older.  Earnings from the account can be withdrawn prior to the age of 59 ½, but you will pay a withdrawal fee of 10% for extracting the earnings from the account.  There are many advantages and disadvantages associated with Roth IRAs and each should be taken into consideration before making the decision of whether to open an account.

Many people believe that lowering their credit card interest rates is an impossible task and they do not even try to get the rate that they pay reduced.  They would be surprised to learn that it is possible for anyone to lower their credit card interest rates by using some simple and efficient methods.  One of the best ways to lower these interest rates is to negotiate with the creditor directly and ask for the rate to be lowered.

How Are Interest Rates Determined?

The interest rate that is assigned to a credit card account is determined by the credit card issuer and based on a complicated formula that assigns a level of risk to the account based on the credit score and payment history of the account holder.  Different types of credit cards will have different minimum and maximum interest rate levels, with the lower interest rates going to the individuals with the highest credit scores and the higher interest rates offered to the applicants with the lowest scores.  There is a legal limit to the amount of interest a credit card issuer can charge and many sub-prime credit card lenders charge this maximum.

Lowering The Interest Rate

If the account holder has been doing business with the company for several years or more, they may be able to lower their interest rate by negotiating directly with a representative of the company.  This representative will be able to look up information about the account, including how long the account has been opened and whether the account has remained in good standing during that time.  If the representative is able to see a clear pattern of responsibility and timely payments, they will be more likely to flag the account for an interest rate reduction.

A significant improvement in the account holder’s credit score can also result in a reduction in the amount of interest a person pays for their credit cards.  Individuals that regularly check their credit report and credit score should contact the companies that issue their credit cards when their credit score reaches a new level, such as moving from fair to good or good to excellent categories.  A reduction of a few percentage points in the interest rate for a credit card can save the person thousands of dollars over the years that they hold the account.

Getting a bargain when making a purchase can make a person feel much happier about that purchase.  This is especially true when the money saved is a large amount, like saving thousands of dollars on the purchase of a new home.  Purchasing a new home can be a stressful experience, but following some simple tips can make the home buying experience more pleasant and save the homeowner a lot of money in the process.

Be Flexible

The first step in getting a bargain on a new home, especially a borrower is looking for first time buyer mortgages, is to be flexible in your desires for the home.  This does not mean settle for less than needed for the family, but being flexible on items like the number of floors in the home or the side of the city that the home is located in can provide the purchaser with a wider range of possibilities in different price levels.  More possibilities will increase the chance that the person will find what they need at a reasonable price.

Examine Several Different Rates

Reviewing the lending rates of several different lenders before deciding which one to approach for a mortgage loan is another excellent way to get the best deal when buying a new home.  Different lenders may offer applicants rates that are a slightly higher or lower than other lenders, a small difference that can save the purchaser thousands of dollars over the life of the mortgage loan.  Reviewing all of the information contained in the mortgage quote will ensure that there are no unpleasant surprises hidden deep within the quote to make it less of a deal than it initially appears.

Do Not Try To Take Advantage Of The Seller

One mistake that many people make when negotiating for a new home is treating the seller as if they are too stupid to see that the buyer is trying to take advantage of them.  There is a difference between negotiating and blatantly trying to take advantage of someone and if the seller believes that they are being taken advantage of, they will be less likely to agree to reasonable concessions.  It is best to take a reasonable and measured approach to the negotiation and be prepared to make concessions in return.

If you want to compare buy to let mortgages, visit The Mortgage Broker.