Start the money ball rolling by putting a few dollars away and before long you’ll be able to develop a whole new approach to money… a little less focus on getting the next shiny object and more on building long term sustainable wealth. Saving will not only boost your financial security and your credit scores but it will also reduce stress and worry about your future.
These benefits will give you the confidence to make choices that will positively impact your financial future. Your long-term savings will ensure that your family is protected if the unthinkable happens. Your challenge is to find the best way to invest for your family’s future.
Start by evaluating your income. Make it a goal to save, regardless of the size of your income, and your savings should go beyond your emergency fund. Prepare to invest a portion of your income and use a specialized savings account to develop the healthy habit of saving money.
1) Set Up A Savings Account
Look for the simplest solution to start saving. It’s easy to put off saving if your system is too complex. If you have a checking account, link it to your savings account to make deposits on a regular basis. If you have your paycheck direct deposited into your checking account you can often schedule a transfer from checking to savings. Having it automated will help avoid the temptation to spend it. Some financial experts advise against the fees, so it pays to shop around for the bank that will offer the best deal (not just the one with the branch closest to your house).
Look for savings accounts with the highest interests. Unfortunately, these days it’s difficult to get much interest on these basic accounts. But it is necessary to start saving here before you move on to higher paying investment products. Save money, build your nest egg, and pay off your debt, and you’ll be on your way to investments and managed funds before you know it.
2) Plan for Emergencies
In addition to a savings account you need to prepare for emergencies. Your first goal should be to have enough to cover things like unexpected expenses like a flat tire or a new water heater. These are irregular expenses but should not be totally unexpected. After all sooner or later they will happen if you have the money set aside for them they won’t be an “emergency” simply an inconvenience.
The next phase is setting aside 3 months worth of living expenses in case you lose your job, get sick or whatever. And finally there is Insurance for the really big emergencies. A life insurance policy will ensure that you do not pass on financial burdens to your dependents. Term life will pay a fixed amount if something happens during the term of the policy. It’s a pure insurance policy with no added features. If you are relatively healthy and don’t go to the doctor often, Health Insurance can be purchased with a high deductible so it covers major expenses but saves you month to month. Other types of insurance include, Home Owners insurance, Long Term Care insurance, and Car insurance.
Income protection insurance is another type of insurance you might want to consider. It will pay your monthly income if you cannot work due to an injury or accident.
Plan for Retirement
You probably have, or considered the possibility of a retirement fund if you’ve been in the world of work for some time. Your options for saving for retirement are almost unlimited, but it’s up to you to research your options and choose the one that is right for you. As stated earlier, it’s best to choose the simplest solution in order to get started. You can always explore further options later on.
Start by taking a realistic view of your income and expenses and decide how much you’ll like to contribute on a yearly basis. Consider the caps and rules for early withdrawal for each account before you dive in.
Work out the duration of your savings and if your yearly contributions will afford you the type of retirement you need. A financial expert could provide direction so you’ll make the right decision that will give you the type of lifestyle you look forward to in your later years.
See Also:
- Improve Your “Save-ability”
- Term vs. Whole Life Insurance – What Should You Choose?
- High Performance Savings Accounts
- Planning Your Estate: 6 Things To Remember
Resources:
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