Here are some practical tips to help you save money while managing your personal finances on a fixed income:
Upgrade Bank Savings Accounts: If your savings account still pays 1 percent or less, switch to a new one. Now you can find rates of 4 to 5 percent thanks to changes made by the Federal Reserve. Websites like Bankrate and NerdWallet can help you compare options. On a $10,000 balance, a 5 percent interest rate could earn you $400 in a year if you were making 1 percent before.
Set Reminders for Card Payments: Credit card companies make a lot of money from late fees, which can be as high as $41 per late payment. To avoid these fees, set a calendar reminder to pay your credit card bill on time.
Consider a Robo-Adviser: If you can’t afford a financial planner, a robo-adviser might help. These programs use algorithms to manage your money and usually charge annual fees of 0.25 to 0.50 percent of your portfolio value, that is less than the 1 percent charged by human advisers. Companies like Fidelity and Vanguard offer these services.
Cut Taxes for Your Heirs: Many adult children who inherit an IRA must empty the account within 10 years, often during their high-earning years, which means higher taxes. To help your heirs, convert traditional IRAs to Roth IRAs and pay taxes when your own tax rate is low, such as after retirement. Your kids won’t owe taxes on Roth withdrawals.
Tap Your 401(k) for Emergencies: The Secure 2.0 Act allows you to withdraw $1,000 from a 401(k) or IRA once a year without the usual 10 percent penalty if you are under 59.5 years old, as long as it’s for an emergency. This can be better than using high-interest-rate debt.
Know Your Credit Card Perks: Many credit cards offer perks like discounted or early access concert tickets, extended warranties, purchase protection against damage or theft, and rental car insurance. Find out what benefits your card offers and use them to save money.
Create a Budget: Track your income and expenses to see where you can cut back. Use free budgeting apps to help you stay organized.
Use Cashback Programs: Sign up for cashback programs and rewards credit cards to earn money back on your purchases.
Shop Around for Services: Compare prices for services like banking, insurance, and utilities to find the best deals.
Emergency Fund: Set aside a small amount each month to build an emergency fund. This can help you avoid going into debt for unexpected expenses.
Reduce Debt: Pay off high-interest debt first. Consider consolidating debts to lower interest rates and simplify payments.
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