How To Save Smarter Without Working Harder

While it would be nice, we don't all have trust funds, a professional golf swing or the stage presence of Bruce Springsteen to bank our retirements on. It's not that the rich, talented and famous don't work, it's just that they don't have to work to retire. Most people must work to save, whether for retirement or another goal. Even if you don't want to work harder at your current job or take on another one, you can become a better saver without breaking a sweat. You will, however, need to learn how to manage your money wisely and make some sacrifices.

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Cut Down on Spending

It's the age-old advice – don't spend more than you make. In fact, the smartest savers spend considerably less than they make. Skip the latte, don't buy a third iPod and resist the urge to fly first class on your next vacation. These sacrifices require some self-control and maybe a bit of intestinal fortitude, but not more work.

Redirect Your Savings

Invest the money you save. The sooner you start funding a tax-deferred retirement account such as an IRA or workplace 401(k), the sooner you can realize enough cash to meet your goals. The IRS allows investors 50 years of age and younger to put $5,000 a year into traditional IRAs as of April 2011. Once you pass 50, you can contribute up to $6,000. As for 401(k)s, some employers match your contributions up to a certain amount — you should at least contribute that much, if not more, to your account. And because the money comes out pre-tax, you won't feel it in your paycheck as much as you might think. Both IRAs and 401(k)s offer significant tax advantages in addition to a nifty way to accumulate a nest egg.

Make it Automatic

Whether you save in a retirement account or a plain old savings account, make it automatic. Virtually every financial institution gives you the option of having money automatically deducted from your checking account to your savings or investment account. Some employers even send automatic deductions from your paycheck wherever you like. If you never have the money available to spend, you're less likely to miss it, making saving a relative snap.

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