These days, a lot of people are struggling to cover their essential bills due to inflation. For people in that boat, boosting your savings account balance may be off the table until living costs come down.
But in a recent New York Life survey, 28% of respondents said that building up retirement savings is a key priority for 2023. So if you’re hoping to see your IRA balance grow this year, here are some key steps to take.
1. Pick one expense to cut
It’s pretty clear that if you were to slash your spending across the board, you’d have more money available to put into your IRA. But it’s also pretty clear that if you were to start cutting expenses left and right, you’d end up fairly miserable.
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Rather than make yourself unhappy and deny yourself all of the things that make life enjoyable, take a look at the expenses you spend money on and identify a single item to cut. That’s right — just one. And it doesn’t even have to be such a large one. If you’re able to cancel a streaming service you don’t use so often and put $20 more into your IRA on a monthly basis, so be it. Every little bit helps.
2. Boost your income with a second job
The bulk of your paycheck might already be taken up by your essential expenses, leaving you with little room to ramp up your IRA contributions. If that’s the case, a second job could be your ticket to increasing your IRA contributions this year.
The gig economy is loaded with opportunities to pick up work on the side, so think about your schedule, skills, and goals. You may need to focus on a job that doesn’t force you to commit to preset hours if your main job’s hours tend to be unpredictable. And if you have skills you can put to good use, like web development or marketing, you may want to focus on those when seeking out a side hustle.
Finally, think about your income goals. Are you hoping to earn $300 a month from your side gig? $400? Having a number in mind could help you narrow down your choices.
3. Make the savings process automatic
Many people fund their IRAs by seeing how much money they have left at the end of the month and transferring it over. A better bet may be to automate the process so your IRA gets funded before you get a chance to spend your money.
Most IRAs will let you set up an automatic transfer from a checking account. Decide what amount you can afford to part with each month and send that money as soon as your paycheck hits so you aren’t tempted to spend it.
Growing your IRA is a good goal to have, but it’s not an easy one at a time when living costs are so high. But if you make one sacrifice when it comes to spending, boost your income with a side job, and automate your contributions, you might end up really happy with your IRA balance when 2023 comes to an end.
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