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Full Version: How to Save Money Responsibly: Tips and Tricks
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Saving money is one of the fundamental principles of achieving financial stability. Whether you're saving for a down payment on a house or just looking to establish an emergency fund, knowing how to save money responsibly is a valuable skill. However, saving money is often easier said than done. In this article, we'll cover some tips and tricks that can help you save money, including:
  • Paying yourself first
  • Avoiding new debt
  • Setting reasonable savings goals
  • Establishing a time-frame for your goals

Paying Yourself First
One of the easiest ways to save money is to make sure that you never get a chance to spend it in the first place. Arranging for a portion of each paycheck to be deposited directly into a savings account or a retirement account takes the stress and tedium out of the process of deciding how much money to save and how much to keep for yourself each month. By doing this, you save automatically, and the money you keep each month is yours to spend as you please. Over time, depositing even a small portion of each paycheck into your savings can add up (especially when you take interest into account) so start as soon as you can for maximum benefit. If you can provide account information for a savings account separate from your basic checking account, you should generally be able to set up a direct deposit scheme with no problems. If for some reason you can't set up an automatic deposit for each paycheck, decide on a specific cash amount to manually deposit into a savings account each month and stick to this goal.

Avoiding New Debt
While some debt is essentially unavoidable, in general, when you can avoid going into debt, do so. Paying a sum of money upfront is always cheaper in the long run than paying off an equivalent loan while interest accumulates over time. If taking out a loan is unavoidable, try to make as big of a down payment as possible. The more of the cost of the purchase you can cover up front, the quicker you'll pay off your loan, and the less you'll spend on interest. Most banks recommend that your debt payments should be about 10% of your pretax income, while anything under 20% is considered healthy. About 36% is seen as an "upper limit" for reasonable amounts of debt.

Setting Reasonable Savings Goals
It's a lot easier to save if you know you have something to save for. Set yourself savings goals that are within your reach to motivate yourself to make the tough financial decisions needed to save responsibly. For serious goals like buying a house or retiring, your goals may take years or decades to achieve. In these cases, it's important to monitor your progress on a regular basis. Only by stepping back and taking a look at the big picture can you get a sense of how far you've come and how far you have left to go. If you're in your prime earning years, most financial commentators say that you'll need about 60-85% of your current yearly income to maintain your current lifestyle each year you're retired.

Establishing a Time-Frame for Your Goals
Giving yourself ambitious (but reasonable) time limits for achieving your goals can be a great motivational tool. For example, let's say that you set a goal of being on your way to owning a house two years from today. In this case, you'd need to investigate the average home cost in the area you'd like to live in and start saving for the down payment on your new house. As a general rule, down payments are often required to be no less than 5% of the purchase price of the home. As such, if you're looking to buy a home worth $200,000,