Nearly everyone wants to be financially successful, whether that means saving enough to retire comfortably, having enough cash for a down payment on a house, or simply not living paycheck to paycheck anymore. But achieving that success can be more challenging that it seems, especially when you have a never-ending list of bills and other financial responsibilities.
However, sometimes all it takes to kick your savings into high gear is the right advice. At its core, saving more money is about establishing new habits and lifestyle adjustments to stop spending on things that aren't necessary and instead put that money toward your financial goals. New research points to some of the advice that Americans say is most helpful in leading them to financial success, and it can help you achieve success, too.
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Advice that can lead to lifelong financial success
According to a survey from New York Life, the top five pieces of advice that millennials say have led them to financial success are:
1. Don't live beyond your means.
2. Create a budget and stick to it.
3. Establish a healthy emergency fund.
4. Save a portion of every bonus or raise at work.
5. Pay off your credit card balance each month.
Although the survey only polled millennials when asking which life advice had led to the greatest success, survey respondents across all generations agreed that they received the same general advice -- especially when it comes to not living beyond your means.
There's a reason these pieces of advice are considered the most helpful: They've been proven to work. When you don't spend more than you should, stick to a budget, and make sure you have an emergency fund in place to cover unexpected costs, it's easier to find extra cash to sock away for the future.
Making lifestyle adjustments to reach your goals
If you have a goal of saving more, it might seem impossible if you're living paycheck to paycheck just to survive. However, sometimes a budget can help solve that problem. Nearly 60% of Americans say they're living paycheck to paycheck, a survey from Charles Schwab found, and yet the survey also discovered that the average household spends nearly $500 per month on unnecessary expenses. In other words, many Americans simply may not realize exactly where all their money is going each month, making it feel like they don't have a dollar to spare.
That's where a budget can be incredibly helpful in saving more. Once you've mapped out all your monthly expenses and know exactly how much it costs to cover all the essentials, you know how much you have left to spend on nonessentials or put toward your savings.
Building a solid emergency fund is another way to help yourself save more and achieve your financial goals. At first it may seem counterintuitive to establish an emergency fund when you could instead put that money straight toward your other savings goals. However, a well-stocked emergency fund can actually help you save more by avoiding other potential financial problems.
For example, if an unexpected expense pops up and you don't have enough cash to cover it, you could be forced to charge it to your credit card. If you can't afford to pay off that balance in full by the next month, you'll start racking up interest -- which can quickly balloon out of control if you don't pay off the balance as quickly as possible. Then, when you're in credit card debt, it becomes harder to achieve your other goals, like saving for retirement. Also, if you're faced with another unexpected cost before you've paid off the first one, you'll be in even bigger trouble.
You don't need to create an emergency fund overnight, but aim to stash away at least a little each month until you have enough savings to cover three to six months' worth of living expenses. Once that fund is established, you'll be able to overcome unexpected financial challenges without throwing the rest of your plans off track.
Achieving financial success takes time, and even the best advice in the world means nothing unless you're willing to make some lifestyle tweaks and sacrifices. By making these adjustments, you can start saving more and achieve all your financial goals.
