People who save more than 3 times as much as the rest of us are making 4 smart choices with their money

super saver build wealthPBNJ Productions/GettySaving more income starts here.PBNJ Productions/Getty

When you compare people who save a ton of their income with the rest of us, the decisions that led them there become pretty clear.

In a recent survey, TDAmeritrade asked 1,500 Americans with investable assets of at least $250,000 about their saving strategies. About 20% of this group are "super savers" who save or invest an average of 29% of their income, while everyone else saves an average of just 6%.

Three in four super savers are either financially independent - meaning they don't need to work to live - or are on their way, the survey found. Some even retired early.

As it turns out, "super savers" prioritize four key decisions others are less likely to: They avoid high-interest debt, stick to a budget, invest in the stock market, and max out their retirement savings.

Here's a bit more about each:

Avoid high-interest debt

The TDAmeritrade survey found that 65% of super savers avoid high-interest debt, compared to 56% of others.

Living above your means and overspending is a way to ensure you'll never build wealth. Debt isn't all bad, but the kind that comes with interest rates above 10%, like debt owed on most credit cards, is best avoided.

People who build their own wealth, financial planner Eric Roberge wrote, "don't spend money they don't have, period."

Stick to a budget

Keeping track of your cash flow, whether you call it a budget or not, is critical to getting your savings rate where you want it.

TDAmeritrade found 60% of super savers adhere to a budget, while 49% of others do the same. Perhaps more importantly, the super savers allocate less of their budget toward housing, spending nearly 10% less than the average person.

Interestingly, super savers and average savers spend the same amount of their budget, about 7%, on travel.


Invest in the stock market

Fifty-eight percent of super savers invest in the stock market, compared to 34% of others, and they got in early. More than half (54%) of super savers who invest started before age 30, the survey revealed, while only 40% of others did the same.

Super savers are far more likely than non-super savers to invest in the stock market through brokerage accounts (65% vs. 35%) and retirement accounts (90% vs. 65%). The key to making these investments worthwhile is ensuring they're low-cost and diversified.

Max out retirement savings

According to TDAmeritrade's survey, the best savers make use of both tax-advantaged and non-tax advantaged retirement accounts. More than half of the best savers have money invested in a 401(k), a traditional IRA, and a Roth IRA.

Money funneled into 401(k)s and IRAs can result in significant tax savings. These accounts take contributions pre-tax, so they effectively reduce a person's taxable income. Plus, they'll grow tax-free for years before retirement. In 2019, you can contribute up to $19,000 to a 401(k) and $6,000 (plus another $1,000 if you're over 50) to IRAs.

Personal Finance Insider offers tools and calculators to help you make smart decisions with your money. We do not give investment advice or encourage you to buy or sell stocks or other financial products. What you decide to do with your money is up to you. If you take action based on one of the recommendations listed in the calculator, we get a small share of the revenue from our commerce partners.
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