Saving is difficult. There are many demands on your money and often even the best of intentions can result in a very small or non-existent savings fund. This process can be made much harder if you have no specific goal. However, saving is an essential part of life, particularly towards retirement and a future time when you no longer need to work. The following tips should help you prioritize your savings needs and reach your goals:
In America and most other countries there are pension schemes which are established and maintained by your employer. The first part of any savings goal should be to join these schemes and put as much in as you can comfortably afford. Every pay rise should be placed into your retirement pot if possible. If this is not possible you should ensure the amount contributed every year is more than the year before. Even small amounts can mount to a significant sum of money in the future thanks to the effects of compound interest. Ideally you should try to put the maximum allowable into your company pension fund every year.
Other Savings Opportunities
There are a great many accounts available which will allow you to save tax free; this is thanks to specifically designed laws which encourage people to save for retirement. Locate these funds; if necessary use a tax advisor to help choose the most appropriate funds for your needs. Again, these accounts have limits as to how much you can place in them every year; aim to hit the limit if possible.
Saving Money for Kids’ College
You will probably plan to have children at some point in the future. However, saving for them and their college fund is not your priority! There is plenty of financial help available for those who wish to attend a college and you will be able to support them with this when the time comes. Once you have your retirement goals set and the funds committed you will be able to channel spare funds into a specific college investment vehicle.
You will, no doubt, have other goals that you would like to reach. This may be the cost of a wedding, an exotic holiday or even a specific car. Having sorted and apportioned your funds between bills, retirement funds and future college funds you will hopefully have enough funds spare to commit to a regular savings account. These funds may be for a specific purpose, as mentioned above, if not; then they can be used to further your investments and improve your financial position.
Your retirement portfolio is made up of your pension contributions and any other investments you have. It is essential to be constantly watchful of what opportunities are available and to monitor any assets you have. There may be tiles when you can afford to invest in property of shares and these can be of great benefit for your future. Just be sure to invest money that you can afford to lose. Don’t take risks if you can’t afford to lose, and be rational.
It is also important to put aside a little cash as an emergency fund. Ideally you should aim for between three and six months worth of living costs; this will help to tide you through any financial issues and provide you with enough funds to deal with emergency repairs; whatever their nature. It is also essential to review your portfolio regularly and, even if you change jobs, to avoid the temptation to cash in any pension schemes. Your goal must be to keep saving so that you can enjoy the retirement you deserve.
Last but not least, it’s worth considering taking out disability insurance to protect what you have built up should the worst happen. Of course, this is no reason to adopt a negative behavior. Just make sure to get your priorities straight. After you’ve done that, start slow. Saving money can be a challenge; however, it’s not something impossible to do. A great idea is to use technology to help you out. There are lots of money management apps and pension software out there you can use to keep track of your finances. So why not give them a try?