17 Best Long term saving tips to build wealth

When I started saving money, I was always worried about how slowly my accounts were growing and sometimes got frustrated over not having enough money. If you are getting started, you might as well be having the same issues. To make your saving journey easier and fulfill your financial needs, I have put together a list of 17 long-term saving tips you can rely on to realize your financial goals without stress or sacrificing your needs. I have used these saving tips myself and the results were phenomenal.

Saving money for the long term requires an understanding of your financial goals and the discipline to pursue them. Sometimes you will need to give up what you want to prepare for a better future. This is known as delayed gratification. If you can manage to follow these long-term saving tips, you will have no trouble reaching any saving goals you have in no time.

If you want to take control of your finances, here are 17 long-term saving tips you can start today.

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1. Pay off your debts as soon as possible

The first and most effective long-term saving tip to build wealth is to pay off your debts as soon as possible. While you can use debt to build wealth and reach financial independence, debt can also lead to financial destruction. Debt makes it difficult to fulfill other financial obligations and long-term saving goals. The more debt you accumulate the harder it becomes to pay them off due to interest charges.

Too much debt also increases your debt-to-income(DTI) ratio which is a measure of how much debt you have compared to your income. Most lenders prefer borrowers with a DTI ratio that is at most 36% with 28% being a preferable ratio.

Paying off debt fast allows you to pay less interest which frees cash you can use towards other long-term goals. Additionally, less debt comes with a chance to access credit with fewer restrictions due to a lower DTI ratio.

When paying off debt, start with bad debt. Bad debt is any debt that costs you interest usually higher interest charges without anything in return. Think about credit card debts. Most credit card accounts come with higher APRs and the interest is compounded. According to LendingTree, the average APR on new credit card accounts is 24.45% as of September 2023. Imagine paying 24.45% APR on the money you spend on your clothes.

This interest is so high that no investment is available on the market that can offer the same ROI consistently. So, if no investment can pay you the same rate, why would you pay it to the credit card company? The point here is that bad debt costs you a lot of money in interest charges and makes it harder to save for your long-term saving goals. Everything becomes easier after getting debt out of your way.

To save for long-term saving goals, eliminate your debts starting from the ones with the highest debt first. This strategy is known as Debt Avalanche Method and it works best for those who are serious about getting out of debt. Learn more about the Debt Avalance Method and how to successfully use this strategy to pay off your debts. You can also use the Debt Snowball Method which is an alternative method that focuses on eliminating your debts starting from the smallest debt first.

You might also like: 6 effective ways to pay off credit card debt

2. Have saving goals

Having a saving goal is another important step to save money for the long term. You cannot just put the money into an account or a piggy jar without a reason behind it and let it grow without temptations to spend it. When you have the money at your disposal everything becomes a necessity. Without savings goals, you will always find a way to spend what you are saving. To make it easy on yourself and stick to your long-term savings journey and build wealth, establish saving goals, and allocate a small portion of your paycheck toward those goals.

Here are some of the best savings goals you can start saving money for.

Retirement savings
529 College fund for your kids
Travel fund
Save for a down payment on your house
Buy a car
Starting a nonprofit organization
Building a high school in a developing country
Wedding
Save for a home renovation
Save money to start a business

These saving goals will keep you motivated and prevent you from overspending. Depending on the nature of your saving goals, you might also get tax benefits which could help boost your overall long-term savings. For example, you can get upfront tax benefits by contributing to your retirement accounts such as 401(k) plans and a traditional IRA, or other savings accounts such as 529 college fund or HSA.

3. Create an unbreakable budget and stick to it

All wealth building starts with making money and managing that money through budgeting and saving. This is why one of the best long-term saving tips is to create a budget that allows you to increase your savings. The budget will help you allocate the proper amount toward different long-term savings goals. You can also use the budget to cut back on unnecessary expenses to boost your savings.

To create a budget, start by listing all your incomes and expenses side by side in an Excel spreadsheet. A physical paper or online budgeting app can achieve the same task. Since you want to save for the long term, your total income should be way more than your total expenses. The goal of your budget is to help you see how much you are making, where it is being spent, and how much you are saving.

After creating a budget, evaluate your expenses and cut back where it is necessary. For example, if you have multiple streaming services, it will make sense to cancel some of them to increase your savings. Additionally, if you are spending too much money on food due to eating out a lot or buying brand-name products, it will be wise to start prepping your own meals and buying generic brands. Here is a guide to reducing your expenses and increasing your savings.

Any money you save through budgeting can be used to pay off your debts, save for retirement, invest, and fulfill other long-term saving goals.

4. Start cooking your meals at home

One of the greatest long-term saving tips is to learn how to cook. This long-term saving strategy might sound silly, but it is so effective that if you follow it daily, you can save thousands of dollars each year. Many people never learn to cook because they feel like they don’t want to be chefs. Others don’t cook because of busy schedules.

But, I guarantee you that those who make their own meals, eat healthy foods at a fraction of the cost.

For example, you can easily make an entire meal that can feed 3 people under $10. But, if you eat in a restaurant, $10 won’t be enough to even buy dessert. In addition to the cost of the meal, you also have to tip servers which is an extra cost that can easily be avoided if you manage to make your own food at home.

So, if you want to save money for the long term, start by evaluating the way you eat.

If you have a busy schedule, do a weekly meal prepping. This is usually possible when it is conducted during the weekend. For example, you can spend Sunday prepping all the meals you will eat throughout the week and pack them in individual containers. This way, you can make different meals per day which is a good strategy to avoid eating the same thing over and over for an entire week.

5. Take advantage of discounts and coupons

One of the most underrated long-term saving tips is to buy discounted products. Saving a few dollars on a single product might not be that much. But, when you make it a habit to buy products that are on discount, you end up saving a lot of money over time. The money you don’t spend on discounted products becomes your savings.

The next time you head to the store, look for items that are being sold at a discount, use coupons, and check clearance isles. You might find good deals using this strategy.

6. Buy only what you need

Most people don’t save money because they are eager to spend every dollar they make to impress their friends and strangers. These habits lead to long-term financial stress and emotional instability.

What if you can avoid spending desires and buy only what you need? Most wealthy people follow this simple yet powerful strategy to boost their net worth. Buying only what you need is probably the single most important long-term saving tip you will come across. Some people call this strategy, “living below your means”. That is right. If you want to save money for the long term, you need to live below your means and start buying only the things you need and avoid things you want. This is the only way to lower your expenses and reach any long-term savings goals.

7. Use credit cards for things you have cash for

While millions of people are struggling with credit card debts and have no idea how to pay them off, there are others who are taking advantage of features that come with their credit cards. Each credit card comes with some form of perks such as miles, cash back, points, discounts, etc. Each of these features acts as a discount on qualifying purchases. By using credit cards to purchase these products, you can easily save money on these purchases. Over time, these savings can become huge. For example, instead of using cash to purchase your groceries, use a cashback credit card to save up to 5%. This 5% becomes your savings on those purchases. If used correctly for a while, your credit cards will save you hundreds of dollars through cash rewards, mile points, signup bonuses, etc.

For this strategy to work, you must pay off all your credit card balances in full each month to avoid carrying a balance on your credit cards which leads to paying high APR and unnecessary fees.

Credit cards do not only benefit you through perks. The purchases you make on your credit cards also help you build credit which is essential when it comes to taking out loans and mortgages. With a good credit score, you will qualify for competitive rates which in turn will save you money in interest charges. You might also qualify for different discounts on other services you conduct with businesses. For example, some landlords waive security deposits for tenants with good credit scores.

8. Grow your own herbs

This long-term saving tip might sound basic, but it can actually save you a ton of money in the long run. Cooking herbs are expensive and growing them yourself can save you a lot of money down the road. A tiny bundle of herbs costs more than $3 in some markets which is too much especially if you cook a lot.

You can also take it a step further and grow your own greens such as salad. These greens are easy to grow and they do not take up a lot of space. Even if you are living in a rental apartment or in a city, a few containers can accommodate a lot of herbs and greens.

9. Regulate your entertainment expenses

We cannot talk about long-term saving tips without touching base on entertainment. While most people think about video games and championships when someone says entertainment, it is much more than that. Entertainment covers those video games of course, but also includes movies, gambling for fun, online subscriptions, or anything else that you do for leisure that costs you money.

Entertainment can cost you a lot of money depending on the way you approach it. If you have subscriptions with every movie streaming company, consider reducing them or eliminating them completely. This will allow you to free cash that you can use where you need it the most.

10. Contribute more toward your retirement savings

Saving for retirement is one of the most rewarding ways to save money. Every penny you contribute to your retirement savings gives you either direct or indirect financial benefits. For example, a Roth IRA does not give you direct tax benefits but you get to grow your account tax-free. Additionally, qualifying distributions from a Roth IRA are tax-free. If you have a 401(k) plan, however, you get direct tax benefits as your contribution comes from your before-tax wages.

Besides tax benefits, your employer might also match your contribution up to a certain percentage. Your company could match your contribution by 3% or 6% which is considered free money. The tax benefits you get, your employer’s match, and your own contributions help you grow your retirement savings efficiently and build wealth fast. This is what makes retirement savings one of the best long-term saving tips anyone can rely on to grow wealth.

11. Open a savings account

Savings accounts are usually the basic forms of saving tips you can rely on. While these accounts might sound simple, they serve a crucial role in financial planning. For example, you can use a savings account as a secure location to hold your emergency fund. You can also use a savings account to save for short-term or long-term saving goals.

What makes a savings account one of the best savings tips to take control of your finances is that it gives you access to your funds when you need them the most. Most savings accounts allow you to make up to 6 withdrawals per month.

Additionally, savings accounts pay you interest while protecting your funds at the same time. According to the Federal Deposit Insurance Corporation(FDIC), the national average savings account interest rate is at 0.45% APY. This is not the best return you can get on your bucks. However, it is better than having your money in a checking account or under your mattress. You can easily open a savings account either online or at your local bank or credit union branch.

12. Open a certificate of deposit(CD)

If you think the returns you are getting on a savings account are not enough; invest in something that yields more but also keeps your money safe such as a certificate of deposit(CD).

CDs pay a much higher interest compared to traditional savings accounts. The downside is that CDs have more restrictions and your money will be locked into the account until the maturity date. Accessing your money before the end of your CD term triggers an early CD withdrawal penalty which is usually a number of days or months of interest.

What makes opening a CD one of the greatest long-term saving tips is that the interest is usually fixed. In order words, you can know ahead of time how much you will earn when your CD matures. CDs are also great savings tips due to having many options to choose from. If you want to save for a short-term goal, you can open a short-term CD such as a 3-month CD or 6-month CD. On the other hand, if you want to save for a long-term goal such as a college education or a down payment on a house, you can open a long-term CD such as a 5-year CD or even a 10-year CD.

Another option is to open a CD ladder which is an option to buy multiple CDs with different maturity dates. This option is essential because you get to have access to some of your money over time. According to FDIC, the national average rates for CDs are as follows as of September 2023.

CD term	Interest rate
1 month CD	0.21%
3 month CD	1.37%
6-month CD	1.36%
12month CD	1.76%
24 month CD	1.51%
36 month CD	1.35%
48 month CD	1.31%
60 month CD	1.38%

CD rates for September 28, 2023. Source FDIC

To open a CD account, you might need to meet the minimum deposit requirements. Most banks, credit unions, and financial institutions require anywhere between $500 to $10,000 to open a CD account. Keep in mind that the type of CDs you want to open will also dictate the minimum deposit requirements. For example, you will need about $100,000 to open a Jumbo CD.

Learn more about different types of CDs and how to pick the right CD account that matches your saving goals.

13. Invest your money in mutual funds

If you want higher returns and are willing to take on more risk and can stomach the volatility of the market, mutual funds can be a great way to save money and build wealth. This option also serves as an investment strategy.

What makes mutual funds some of the best long-term saving tips is that the returns are higher but the volatility is not as high as individual stocks. With a mutual fund, you can get paid interest or dividends as a passive income.

14. Save your money by buying real estate assets and stocks

Real estate and the stock market are known as some of the fastest ways to build wealth. The stock market is known for its high volatility and exponential risk while real estate is more conservative. However, both sectors have proved to be reliable for savvy savers and investors. Putting your money in these assets is a great saving tip that you should consider as some of these assets hold value for a long time with more than average return.

For example, you can buy a rental property and collect constant rental income on top of appreciation and building equity in the property every time a tenant makes a payment. If you don’t like real estate, buy individual stocks for growth or dividend payout. Companies pay dividends every quarter. Once you have earned your dividends, you can either cash out or reinvest them for more shares which allows you to take advantage of compounding interest and grow your portfolio much faster.

15. Automate your savings

We cannot talk about long-term savings tips without stressing the importance of automation. Automating your savings is so critical that most people fail to save money simply because they never automate their savings.

Automation prevents you from spending all your income and makes your savings journey seamless. For example, you can easily automate a portion of your paycheck to be deposited into your savings account, or retirement account.

If you have specific long-term saving goals, deposit the money in these accounts automatically before you touch them to overcome spending temptations.

16. Establish an emergency fund

Financial stability relies on measures you put in place and your level of preparedness to handle sudden emergencies. While you can have money invested in stocks, real estate, or index funds, these investments might not do you good if you don’t have an emergency fund. This fund acts as a financial cushion to fall back on in case of emergency cases such as job loss, expensive medical bills, or house repairs. Without an emergency fund, you might end up liquidating your investments at a huge loss to save yourself or simply lose your home or car.

Before you lock your money into any account or investment product, you must have an emergency fund. How much should you save for emergencies? Wells Fargo suggests funds that can last at least between 3 to 6 months’ worth of expenses. Less than three months might not be enough to cover your expenses while more than 6 months will be too much money sitting idle in the account.

17. Be patient

All of your long-term savings tips will work only if you are patient enough and believe in the process.

What I have learned over the years is that patience is the main ingredient in any financial goal including saving money. It takes a long time to achieve success and to hold on to your goals for that long you need to be patient and disciplined enough to stay on the right path. For example, investing is one of the best long-term saving tips you can utilize to grow wealth and eventually reach financial independence. But, you cannot grow your investment account in a single year. It takes many years of hard work and putting money away to see real results through compounding interest. During this time, all you have to do is be patient and trust the process.