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<p>They keep their rainy-day funds funded. Their bring-lunch-to-work game couldn't be stronger. And retirement savings? Their IRAs deserve A+'s.</p>
<p>It's tempting to think of great savers as unicorns. And with good reason: A 2018 GOBankingRates survey found that 16% of Americans have $300,000 or more in retirement savings, while 42% have stashed away $10,000 or less.</p>
<p>What do people say holds them back from saving more? A 2018 Bankrate poll indicated that expenses, underpaying jobs and debt are among the most common challenges. Life gets in the way, too: Roughly one in six respondents reported that they simply haven't gotten around to saving.</p>
<p>Whatever your reason, know that it is possible to <a href="https://www.lifeandmoney.citi.com/lam/articles/money/family/personal-financial-planning-for-families" data-link-source="tiny">start saving</a> and make a dent in debt &mdash; just take it from other people who have adopted some smart money tactics and joined the ranks of super savers.</p>
<h2>The money coach</h2>
<p>Ashley Feinstein Gerstley began her career in investment banking but came to realize the field didn&rsquo;t suit her. &ldquo;I was making a lot of money, but working long hours,&rdquo; she explains. &ldquo;I was eating take-out food at my desk every night and leaving at 2 a.m.&rdquo; After getting her annual bonus, she decided to quit and make a lifestyle change.</p>
<p>Gerstley invested in workshops and classes to help find her next career, but also splurged on dinner and drinks with friends &mdash; a habit from her days as a high earner. &ldquo;I realized pretty quickly that my bonus was almost gone, and my lifestyle was unsustainable,&rdquo; she said. &ldquo;I had to figure out my money stuff.&rdquo;</p>
<p>Through a certification with the International Coach Federation, Gerstley became a money coach. In her newfound role she not only helps clients get more organized with savings and investments, but also guides them over any psychological hurdles they encounter along the journey. Here are the top financial tips Gerstley shares with clients (and takes note of herself):</p>
<h3>1. Talk about money</h3>
<p>&ldquo;People think everyone is doing better than them,&rdquo; Gerstley says. That mindset may make you hesitant to talk or seek help with your own financial problems, and, by extension, vulnerable to unintended peer pressure to spend more money. &ldquo;Like when you&rsquo;re at dinner and there&rsquo;s pressure to have another round of drinks &mdash; another round of $17 cocktails. It&rsquo;s not [your friends&rsquo;] fault, they just don&rsquo;t know that you are trying not to spend so much money.&rdquo;</p>
<p>Share your money story &mdash; in terms you&rsquo;re comfortable with. Decline that pricey cocktail, and simply explain that you're working toward a goal &mdash; like paying off student loans or buying a car &mdash; and would rather that $17 go into a savings account.</p>
<p>Gerstley says when you speak up about your own financial concerns, you may see your friends follow suit. From there, plan less expensive gatherings, like potluck dinners and game nights. Then sock away the money you save.</p>
<blockquote>
<p>Share your money story &mdash; in terms you&rsquo;re comfortable with.</p>
</blockquote>
<p><img class="right_image" src="https://www.lifeandmoney.citi.com/rcs/lifeandmoney/storage/public/web_GettyImages-1040303974.jpg" alt="woman taking notes as she refers to her mobile device"></p>
<h3>2. Make a money journal</h3>
<p>In Gertsley's book, The 30-Day Money Cleanse, she suggests <a href="https://www.lifeandmoney.citi.com/lam/articles/money/productivity/bullet-journal-financial-planning" data-link-source="tiny">documenting every penny you spend</a> and how it makes you feel in a journal. This can help you identify the things you really care about spending money on and expenses you can cut.</p>
<p>"Like a food cleanse, if you quit dairy and sugar and coffee, you might realize that you don't miss them." Gerstley informs. This all leads up to Gerstley's main lesson: Change your money mindset. "Successful money cleansers always experience this shift where personal finance is not 'a have to,' they realize it is a gift and an act of self-love," Gerstley says.</p>
<h3>3. Put savings out of sight</h3>
<p>Many people have linked checking and savings accounts. It's convenient, allowing you to access your savings balance by transferring funds to checking. But some may find it helpful, in the spirit of better savings habits, to create at least one <a href="https://www.lifeandmoney.citi.com/lam/articles/money/managing-money/money-market-account-or-cd-account" data-link-source="tiny">savings account</a> that is not connected to your checking account, Gerstley suggests.</p>
<p>You can still set up deposits to it through your checking account or deposit straight into it each month like any savings account &mdash; but making it separate can click something in the brain so it doesn't seem as accessible. Consider assigning this "lock box" a purpose &mdash; to cover emergencies or a home down payment.</p>
<p>Likewise, Gerstley says, "View the money in a 401(k) or IRA accounts as untouchable until you retire." They're not intended to fund a car purchase or a wedding.</p>
<h3>4. Don't delay</h3>
<p>Many people, believing that a bigger paycheck &mdash; and therefore a more forgiving budget &mdash; is always on the horizon, and put off saving till they get older. Gerstley flags this thinking as a huge problem. If you happen to lose your job or face medical issues, savings will be a crucial cushion. The time to start saving was yesterday.</p>
<h2>The frugal lawyer</h2>
<p>Holly Carroll worked as an associate lawyer at a New York law firm in her late twenties and early thirties. The money was amazing, she says, but the hours were brutal. &ldquo;I knew I couldn&rsquo;t keep it up,&rdquo; Carroll says. &ldquo;I just decided to pay off my school loans and sock away as much as I could.&rdquo; So while her fellow associates lived in doorman buildings and dined out at five-star restaurants, Carroll developed frugal habits and shared a modest two-bedroom in Brooklyn. She still went out for drinks with friends and made the occasional splurge, but she developed some smart strategies around limiting her spending.</p>
<p>When she quit, she and her husband decided to move back to her hometown of Pittsburgh, PA, where their income went much further than it did in New York. They found a&nbsp;<a href="../../index.htm" target="_blank" rel="noopener" data-link-source="tiny">three-bedroom home in her dream neighborhood</a>&nbsp;&mdash; and she had saved up enough money to pay for it in cash. Carroll is now a stay-at-home mom and avid crafter. Her top advice:</p>
<h3>1. Don&rsquo;t overspend on work attire</h3>
<p>&ldquo;When I first started at my [attorney] job, there was another associate I worked with who always looked sharp; [she] wore the same suit a few days a week and rarely wore designer heels,&rdquo; Carroll says. They were chatting one day, and her colleague explained her work dress policy: She considered money spent on work clothes as cutting directly into her salary.</p>
<p>That idea was like a light bulb moment for Carroll. She had always been a simple dresser, so she developed a strategy of sticking with a set color palette so that she could easily coordinate all of her work pieces into multiple outfits &mdash; it often seemed she had a larger wardrobe than she did.</p>
<h3>2. Set a weekly cash allowance</h3>
<p>&ldquo;I set a budget for weekly walking-around money and take out that amount in cash,&rdquo; she says, "then I try to only spend that much.&rdquo; Physically seeing how much money she has to spend usually keeps her from making impulse purchases or going shopping on a lunch break.</p>
<blockquote>
<p>Set a budget for weekly walking-around money and take out that amount in cash.</p>
</blockquote>
<p><img class="right_image" src="https://www.lifeandmoney.citi.com/rcs/lifeandmoney/storage/public/web_GettyImages-857304948.jpg" alt="two women cooking"></p>
<h2>The young saver</h2>
<p>When Haley Evans graduated from college and moved to Dallas, TX, she had very little student debt and earned a healthy paycheck. "But I spent it all on Dallas nightlife," Evans says. By age 24, she says, "I was kind of trapped in this cycle" &mdash; unfulfilled in her job, and compensating through happy hour, brunch and shopping. Evans was taking advantage of all that Dallas had to offer, but that lifestyle quickly went beyond her financial limits.</p>
<p>Now, five years on, Evans has remade herself as the model of a buckled-down saver. Her husband's pay covers daily expenses, and she puts her income toward business school and savings &mdash; both investments in her future. Here is her top advice:</p>
<h3>1. Create frugal joys</h3>
<p>A profound moment helped end her cycle of wasteful spending. "One night I was out drinking and just realized I wasn't getting any joy out of it," she says. "I felt like I wasn't really getting to have deep talks with friends since it was always so loud and it just didn't seem worth it anymore."</p>
<p>The next time a friend suggested a big night out, she countered with a nice long walk and home-cooked dinner. "I got to have real one-on-one time with her," Evans explained. "I call it finding frugal joys." Five years later, she and her friend are still doing those walks and joined a discount wine club to enhance those dinners.</p>
<h3>2. Get more out of your bank accounts</h3>
<p>One concrete piece of advice Evans offered: Find checking and savings accounts that offer high-interest rates. Evans and her husband did a lot of research to discover a savings account that offered much higher interest rates on their balance. "We put our wedding fund in there and the down payment for a house," she says. "It's awesome to see that [additional] money each month."</p>
<h3>3. Find healthy splurges</h3>
<p>"There was a period of time after [my] money cleanse where I was crazy thrifty because I am so competitive," Evans says. "But when you go too extreme, you feel deprived and then you binge." So, she figured out what regular splurges would bring her the most rewards. The top one was her gym. "I pay $105 a month &mdash; which is a lot for a gym here &mdash; but it brings me so much joy. It's community and women-based, and I go at least three to four times a week."</p>

The Secret Habits of Super Savers

<p>When it comes to making good financial decisions, it helps to start with some basics: taking time to understand your finances and regularly monitoring your spending and saving.</p>
<p>A good first step is determining your goals. Are you saving up for something big &mdash; tuition, a new car, a wedding? Or maybe you want to get a jump on building up a nest egg or are looking to slow down spending after a&nbsp; month of big purchases. Once you firm up that purpose, it&rsquo;s easier to &nbsp;take action and focus on <a href="https://www.lifeandmoney.citi.com/lam/articles/well-being/in-the-moment/how-to-improve-financial-wellness" data-link-source="tiny">improving your financial wellness</a>.</p>
<p><img class="right_image" src="https://www.lifeandmoney.citi.com/rcs/lifeandmoney/storage/public/tips-for-managing-money_body.jpg" alt="A young family reviews their budget on a laptop"></p>
<h2>Create a budget</h2>
<p>To make sure you're consistently spending in line with your income, it's a good idea to draft a budget. Start by recording every dollar you spend; it's the only way to know exactly where your money goes each month. You can do it in either of these ways:</p>
<ul>
<li>Write it down. Go the traditional route and record all your expenses &mdash; even the smallest ones, like a coffee &mdash; in a notebook or <a href="https://www.lifeandmoney.citi.com/lam/articles/money/productivity/bullet-journal-financial-planning" target="_blank" rel="noopener" data-link-source="tiny">bullet journal</a>. Categorize these expenses into groups like groceries, clothing and transportation. You'll be able to see how quickly they add up, and you might spot areas where you can cut back.</li>
<li>Go digital. Try mobile banking or a budgeting app you trust to track your spending. With this method, you may be able to organize and categorize your purchases more seamlessly.</li>
</ul>
<h2>Set&nbsp;savings goals</h2>
<p>Not sure how much you should have in savings? One good guideline, according to most financial advisors, is to start an emergency fund that could cover three to six months of expenses. That may sound challenging, but you can start with a small amount and build it gradually.</p>
<p>While you're doing this, you might&nbsp; also want to sock something away for bigger expenses like <a href="https://www.lifeandmoney.citi.com/lam/articles/milestones/weddings/modern-wedding-trends-and-budgeting-explainer" target="_blank" rel="noopener" data-link-source="tiny">a wedding</a>, a house or <a href="https://www.lifeandmoney.citi.com/lam/articles/travel/destinations/6-destinations-youve-never-heard-of-seth-kugel" target="_blank" rel="noopener" data-link-source="tiny">a vacation</a>. One way to do this is to have a portion of your paycheck (say, 5% to 10%) automatically deposited directly into your savings account. Keeping this money out of your checking account can help you avoid the temptation to spend impulsively. You can even give your savings account a name like &ldquo;My Next Car&rdquo; to motivate you to continue putting funds there.</p>
<p>Saving for retirement? You may want to consider setting up an individual retirement account (IRA) or contributing to your company's retirement plan (e.g., 401(k) plan). Both 401(k)s and IRAs offer tax benefits, either when you contribute money or withdraw it, but keep in mind there are usually penalties for an early withdrawal.</p>
<p>It can also be smart to diversify your saving methods when you can. For example, low-risk, higher interest savings options such as <a href="https://www.lifeandmoney.citi.com/lam/articles/money/managing-money/money-market-account-or-cd-account" target="_blank" rel="noopener" data-link-source="tiny">CDs or money market accounts</a> typically earn more than a regular savings account. You'll want to think through the pros and cons to figure out the best approach for you.</p>
<h2>Maximize a 401(k)&nbsp;</h2>
<p>If your company offers a 401(k) plan or other type of retirement plan, depending upon which type of company you work for, take advantage of it &mdash; it's never too early to start <a href="https://www.lifeandmoney.citi.com/lam/articles/milestones/retirement/the-new-retirement" target="_blank" rel="noopener" data-link-source="tiny">planning for retirement</a>. Contributions reduce your taxable income and, on top of that, companies often match 3% to 6% of employee contributions, in effect doubling your savings. To make the most of compounded interest, it's helpful to invest early in your career and often. You may want to set up automatic deposits so that a designated amount of your paycheck goes right into your 401(k) or other type of plan.</p>
<h2>Get guidance from a financial advisor</h2>
<p>Consulting a professional for a <a href="https://www.lifeandmoney.citi.com/lam/articles/money/managing-money/save-money-with-a-financial-checkup" target="_blank" rel="noopener" data-link-source="tiny">financial checkup</a> is often worthwhile. Financial advisors can help you establish long- and short-term savings goals, develop plans to <a href="https://www.lifeandmoney.citi.com/lam/articles/money/managing-money/how-to-pay-off-debt" target="_blank" rel="noopener" data-link-source="tiny">pay down debt</a> and offer advice to help you <a href="https://www.lifeandmoney.citi.com/lam/articles/money/finance-101/how-to-get-and-keep-a-good-credit-score" target="_blank" rel="noopener" data-link-source="tiny">improve your credit score</a>.&nbsp;</p>
<p>They can advise you on how to consolidate accounts, diversify and make changes to your investment portfolio. However, asset allocation and diversification do not guarantee success or protect against loss.</p>
<h2>Be strategic with credit and credit cards</h2>
<p>Understanding <a href="https://www.lifeandmoney.citi.com/lam/articles/money/finance-101/credit-101" target="_blank" rel="noopener" data-link-source="tiny">how credit works</a> is key to bringing your financial picture into focus. One important aspect is your credit score, the number that represents the information contained in your credit history. This number is checked by renters, lenders, and utility and cell phone companies, among other businesses, so a high score is a valuable goal.</p>
<p>One way you can build credit is by applying for a credit card and demonstrating responsible credit card use. You'll want to first evaluate the terms and conditions of the credit card reward program as well as the costs associated with that card before choosing to apply (or when you're reassessing your current cards). Consider credit cards that enable you to earn something each time you use it, whether that means <a href="https://www.lifeandmoney.citi.com/lam/articles/money/managing-money/guide-to-best-cash-back-credit-cards" target="_blank" rel="noopener" data-link-source="tiny">cash back cards</a>, <a href="https://www.lifeandmoney.citi.com/lam/articles/money/rewards/travel-credit-card-rewards-tips" target="_blank" rel="noopener" data-link-source="tiny">travel rewards cards</a> or <a href="https://www.lifeandmoney.citi.com/lam/articles/money/managing-money/how-to-use-rewards-credit-cards" target="_blank" rel="noopener" data-link-source="tiny">points-based rewards cards</a>. You can put rewards toward reaching a goal, like a vacation, or toward gift cards.</p>
<h2>Evaluate your spending personality</h2>
<p>What kind of a spender are you &mdash; selfless, spontaneous or more of a planner? When you have a sense of <a href="https://www.lifeandmoney.citi.com/lam/articles/money/savings/saving-money-hacks" target="_blank" rel="noopener" data-link-source="tiny">your spending profile</a>, it can be easier to curb excessive spending and ramp up your savings. Impulse purchases can be tempting but they can also break your budget, so a better move is to save up for purchases instead. To start whittling away at your credit cards and loans, you might even want to embark on a <a href="https://www.lifeandmoney.citi.com/lam/articles/money/budgeting/how-to-save-money-by-doing-a-spending-fast" target="_blank" rel="noopener" data-link-source="tiny">spending fast</a> for a week or two. When you buy only what you need, you can be surprised by how much you're able to put away.</p>
<p><em>&mdash; With additional reporting from Life and Money by Citi editors.</em></p>

This expert advice can help you budget and save, avoid or reduce debt, and invest in your future.

Helpful Tips for Managing Your Money

<p>If you're evaluating your finances, you might wonder whether it's wiser to hold onto your money or to invest it. But a better question may be: What's the best way to do both?</p>
<p>That's the key to building real wealth, according to finance pros, because if you focus only on saving for the near term, you could be short-changing your retirement &mdash; and if you invest in the future but never save money, you may find yourself underfunded when your mechanic tells you the rattle in your car wasn't just a simple fix. For a more comprehensive approach to managing your money, try these expert tip.</p>
<h3>Put your savings to work</h3>
<p>If your funds are in a savings account earning next to nothing, that can be nearly as effective as stuffing your money under a mattress. Ideally your money should go where it will grow at a higher rate &mdash; either in a high-yield, interest-bearing savings account or into another financial vehicle like a <a href=" https://www.lifeandmoney.citi.com/lam/articles/money/managing-money/money-market-account-or-cd-account" data-link-source="tiny">money market account or certificate of deposit</a>.</p>
<p>You'll want to think through the pros and cons. For instance, CDs typically have fixed rates over their term length, whereas money market rates can fluctuate over time, so your earnings may be less predictable. People tend to like the predictability of a CD, knowing how much they'll earn on interest, but the downside is they can't access their funds before the term is up without paying a penalty.</p>
<p>Others like savings accounts because there's often no minimum required to open one, and you can take the money out whenever you need. Money markets operate like both a savings account and a checking account, with high interest rates and the ability to write checks, along with the ability to sometimes make payments with a debit card (with restrictions on how often).</p>
<h3>Explore a laddered approach</h3>
<p>Staggering CDs or bonds can be a smart way to save more, suggests D. Randolph "Randy" Waesche, a financial professional and the president and CEO of Resource Management, LLC, in Metairie, LA, because it takes advantage of rising interest rates and can also help with cash flow.</p>
<p>Here's how it works: Instead of investing, say, $10,000 into one CD that won't mature for two years, you could take the same money and split it up into securities that will mature in 12, 18 and 24 months. This way, you wouldn't have all your money tied up for two years. In one year, you could take the cash from the first CD or reinvest it, possibly landing a better interest rate, and six months later, you'd have another chance to do the same thing.</p>
<h2>Optimized investing</h2>
<p>Your financial goals should be different for investing versus saving, says Mastrolia, and it helps to keep some guidelines in mind. Generally, she says, if you want your money to be available within three to five years, you should save it &mdash; which could mean putting it in short-term investments such as CDs, for example. But if you can go longer without accessing the money, and you have faraway goals that need funding (like saving for retirement or your kids' college funds), it's a good idea to invest it, perhaps in stocks and exchange-traded funds or ETFs.</p>
<p>This is because, even though there's always a risk when investing, "the market, on average, will provide a greater return," Mastrolia says. "If an investor can leave the money in the market for at least three to five years, statistically speaking, they are likely to make money." Here are questions to consider as you explore investing options.</p>
<p><img class="right_image" src="https://www.lifeandmoney.citi.com/rcs/lifeandmoney/storage/public/SaveorInvest_BodyImage.jpg" alt="Couple sitting on a couch talking"></p>
<h3>Go with an advisor or DIY?</h3>
<p>If you'd rather make financial decisions on your own, there are apps and tools you can use to manage your portfolio and <a href="https://www.lifeandmoney.citi.com/lam/articles/money/managing-money/getting-started-with-mobile-investing-apps" data-link-source="tiny">make investments from your smartphone</a><a data-link-source="tiny">. </a>The DIY approach is less expensive, but you miss out on guidance and the professional point of view that an experienced financial advisor can provide.</p>
<p>An advisor's deeper understanding of the financial landscape and investing options can be particularly useful, especially if there's <a href="https://www.lifeandmoney.citi.com/lam/articles/money/managing-money/questions-ask-financial-advisor" data-link-source="tiny">market volatility</a>. It's the same principle as working with a real estate broker. Yes, you can sell a house on your own, but you may have a less stressful and more profitable experience working with a professional.</p>
<h3>When's the ideal time to start saving for retirement?</h3>
<p>It doesn't pay to put it off &ndash; the earlier you start, the more you'll have when you need it &mdash; and that means making your <a href="https://www.lifeandmoney.citi.com/lam/home" data-link-source="tiny">401(k) account</a> a priority, not only because contributions are tax-deductible, but also because employers often match 401(k) contributions up to a certain amount.</p>
<p><a href="https://online.citi.com/JRS/pands/detail.do?ID=IRAInvesting" data-link-source="tiny">Individual retirement accounts</a> &mdash; IRAs and Roth IRAs &mdash; are other long-term savings accounts that are worth focusing on&nbsp;and are subject to contribution limits and other eligibility rules. With a Traditional IRA,&nbsp;the amounts contributed may be tax deductible at the time of contribution and, together with earnings, are taxable at the time of distribution. On the other hand, contributions to a Roth IRA are not tax deductible, but earnings on them may not be taxable when withdrawn when certain conditions are met.</p>
<p>If you're deciding which to invest in, keep this in mind: With a Roth IRA, the tax break comes when you retire, since you'll get tax-free withdrawals. That may sound great, and it is, but a traditional IRA's annual tax breaks might help you save more money every year. That said, if you fear you won't make shrewd financial decisions with the annual tax benefits, it may be best to go with a Roth IRA.</p>
<h3>What are your goals and appetite for risk?</h3>
<p>Experts tend to recommend diversifying your financial portfolio and sticking with safer investments the closer you are to retirement. You can also minimize risk with <a href="https://www.lifeandmoney.citi.com/lam/articles/money/savings/what-is-systematic-investing" data-link-source="tiny">systematic investing</a>, a process that uses data, algorithms and proven policies designed to grow your financial portfolio.</p>
<p>If you have decades to go before this stage, generally you can take more chances for a potentially bigger return; the thinking is that, if your investments lose money, you'll have time to try to recover it. Granted, markets will fluctuate and there are no assurances, but if you're in a position to wait, you may be able to limit any losses to paper. As Mastrolia points out, "If you look at the S&amp;P 500 as a proxy for the market return over the past 100 years, the average annual return was about 10%."</p>
<p>Building real wealth can take some balanced thinking, but it's worth weighing what you're putting away for the future with your spending choices today to land on your ideal spending-and-saving mix.</p>
<p>&nbsp;</p>
<p><em>&mdash; With additional reporting from Geoff Williams and Life and Money by Citi editors</em></p>

Save or Invest? To Build Wealth, Try a Balance — Here's How.

<p style="margin-bottom:11px">An investment strategy that entails setting up payments to be routinely withdrawn from your checking account might sound like a questionable way to make money, but it's actually a fairly straightforward financial strategy for creating wealth, and one that doesn't depend on a lot of luck or magic. Here's how it works.</p><p style="margin-bottom:11px">With automatic investing, you're continually putting money away for your retirement or other goals with certain amounts rather than every once in a while. Technology does the heavy lifting here so you aren't the one making daily decisions. One way is to invest a certain sum in one or many investments that do not change. Another way is to use a robo advisor to monitor and periodically rebalance your investments in line with your risk tolerance, investment goals and time horizon.</p><p style="margin-bottom:11px">Historically speaking, over time — not a few years, and certainly not a few months — the stock market indexes have increased in value (though past performance is no guarantee of future results). That's why an automated investment program can be so valuable: Investors can be distracted by whatever's going on in their lives and sometimes make financial choices powered by emotions, but with automatic investment programs, a person continues to invest. </p><p>"It's all about dollar-cost averaging, an investment strategy in which you invest the same amount of money at regular intervals," says Andre Jean-Pierre, a financial advisor and founder of Aces Advisors, LLC, in New York City. "This ensures you buy more shares when prices are low and fewer when prices are high. As a result, you sidestep the risk of making a sizeable investment when the market hits a sour note."</p><img src="https://www.lifeandmoney.citi.com/rcs/lifeandmoney/storage/public/systematic-investing_body-1_1419556699.jpg" alt="A young woman uses her laptop to adjust her investments" class="right_image" /><h2 style="margin-bottom: 11px;">When can you use automatic investing?</h2><p>Often, when people talk about automatic investing, they're referring to investing through mutual funds or an employer-sponsored retirement plan, such as a 401(k). The way it works: You decide what amount or percentage of your income you want to contribute, and then those funds are taken from each paycheck and diverted into your retirement accounts.</p><p>How much should you contribute? Most professionals recommend putting away 10% to 15% of your pre-tax income toward your retirement. If that feels unrealistic for you, start with a smaller amount, whether that's 5% or 3% or 1%. One percent of your paycheck earmarked for retirement may sound like not enough to successfully fund your future, and it probably isn't, but it's far better than 0%, and if you can add another 1% every year, eventually you'd get to a good place.</p><p>"No two households are the same," says Rui Yao, a professor in the Personal Financial Planning department at the University of Missouri and a CFP<sup> ®</sup>. "How much to save out of your current income requires a careful plan." For instance, if you're carrying a lot of high-interest debt, she says, you'd want to focus on paying that off rather than trying to put 10% of your income toward retirement. Meanwhile, if your employer matches contributions to your 401(k) plan, it's a good idea to contribute enough to get the maximum match that your employer offers if you're able to swing it, she adds. "You can't get the maximum employer's match and at the same time, default on the mortgage or rent," Yao says, but if it's doable for you, "an employer's match is free money on the table — take it."</p><img src="https://www.lifeandmoney.citi.com/rcs/lifeandmoney/storage/public/GettyImages-1151007843_web.jpg" alt="Retired man using smartphone while sitting with dog in room at home" class="right_image" /><h2 style="margin-bottom: 11px;">Why does automatic investing work?</h2><p>In essence, this strategy has historically worked because you're only human, and an automatic investment program is not. You might make a mistake, such as forgetting to reinvest a dividend, or buying too high and selling too low. An automated system, such as a robo advisor, can automatically rebalance your account, selling investments that are too large and buying investments that have become too small.</p><p>For instance, if you originally set your 401(k) contributions to 70% stocks and 30% bonds, you might find after a year that your account looks more like 75% stocks and 25% bonds. If you've set everything to automatically rebalance, your portfolio will do just that, selling some stocks and buying some bonds to get the allocation back to your original settings. (Of course, changing your portfolio always brings the natural market risk of losses or gains to your investments.)</p><p>Granted, it's not as exciting as it might be to pick the next hot stock to explode or to buy a million-dollar winning lottery ticket, but it can be a "get rich slowly" process that has historically worked for many people. Another plus is that, eventually, you may not even miss the amounts you're routinely setting aside for retirement. "It may be difficult to get started to save and invest," says Yao, "but once you have done it for a while, it becomes a new normal and you get used to it fairly quickly." In fact, you could say it'll become automatic.</p><p> </p><p><em>— With additional reporting from Geoff Williams and the Life and Money by Citi editors.</em></p>