However, the future has a way of sneaking up on everyone. Before you know it, you’ll be thinking of retirement and realize that you don’t have enough money to sufficiently live without working.
You’ve worked hard for your money, so be smart about what you do with it. Use these six options to begin your money-saving habits:
1. Emergency Fund
No one wants to think about a situation where you will need money from an emergency situation, but realistically, it’s important to have an emergency fund. The most likely financial emergency to hit you is the loss of income, especially in this economy.
Starting an emergency savings account does mean sacrificing some of your paycheck, which is usually why most people forego a savings fund. However, if there is ever a time you are laid off at work, having a fund equal to six months worth of expenses will relieve your stress of being unemployed.
2. Retirement Fund
For those who are in their 20’s and 30’s, retirement seems a long way off, and making monthly payments to a retirement fund seems pointless. But, when retirement age hits and you have no money, you are going to wish you had made those 401k payments. Even if it’s a small monthly amount, your retirement fund will grow with interest by the time you retire, leaving you a sizeable nest egg.
Even though an employer’s retirement plan is usually better than saving an IRA, for most employers match your retirement contributions, an IRA is not a bad place to start.
4. Down Payment
When you begin thinking about purchasing a house, start putting money away each month in a savings account. The amount you save each month should mimic the amount you would pay for a monthly mortgage payment.
5. Child’s 529 Plan
The tax advantages of these education plans are based on investment earnings, so the longer you have the plan, the more you benefit. If possible, as soon as you start having kids, start a 529 plan for each of them.
6. Burial Trust
This is the money set aside to cover any expenses dealing with your funeral and burial. Although morbid to think about, for an untimely early death, this can ultimately help your family maintain financial stability after you’ve passed.
Saving money needs to be thought about as more than a future and distant destination. It should be a priority even if it means sacrificing current monetary habits. Additionally, it is vital to remove debt from your life first, for debt will only eat into your savings. Look into sites like TitleBucks.com to get a jumpstart on removing the debt from your life so you can begin saving for a future that is right around the corner.
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