Set Up An Escrow Account To Save Money

If you are a good saver by nature, you should set up an escrow account to save your money to pay taxes and homeowners insurance when your insurance and tax bills are due. While Federal Housing Administration, or FHA, mortgages require an escrow account be established, homebuyers may have the choice in other instances of setting up an escrow account or paying taxes and insurance out of pocket if they put down at least 20% of the purchase price. With an escrow account, the amount you owe in property taxes and homeowners insurance for the year is divided into 12 parts. Say your annual taxes are $3,000 and your insurance is $600. Your mortgage payment to your financial institution would include $300 each month to cover those costs. Without an escrow account, you’d have to pay $3,600 out of pocket when your insurance and tax bills are due.

How To Start Saving Money

Start saving your money today. It is easier to save more if you start early. So, you can put aside small sums and over the years watch it accumulate and earn interest for you. If you are planning for retirement, don’t wait till you are 40 to start. Start saving today to ensure a more comfortable lifestyle in your old age. It’s always a good idea to do a monthly or quarterly evaluation of your financial plans, readjusting as you see fit. Your personal spending habits are important. If you don’t know where your money is going, you can’t start making changes. Write down every single penny you spend as soon as you spend it, every day for a week – every bill, newspaper, snack, bus fare, coffee, entertainment, etc. At the end of the week look at where it all went. Can you see any areas where you could make changes? How much do you actually need to survive? This is important because you need to come to grips with how much you could “get-by” with. How much do you need to pay for the basics like mortgage, rent, insurance, bills, food and car each month? Your goal should be to try and save at least three times your monthly survival income with easy access in case of emergency. Next, look at your monthly expenses. This is aside from how much you need for survival. This includes: meals out, entertaining, clothes, holidays, presents, credit card repayments etc. Now look at your what is need for survival and your normal extra monthly expenses, then, compare your total outgoings with your income. Where’s the disparity? Are you overspending? Try and save at least 10% of your income. You never know when you might need it. Place it somewhere with easy access, preferably earning interest – not in a sock under the mattress. Start handling your own money. If you use a financial consultant, ensure you understand how your money is being managed. Try and get your debt repaid as early as possible as this will save on interest.