Prioritizing your savings goals helps you reach them. Use these tips to make a solid savings plan.
Most people know they should save mopney, but don't know what to do next. Giving the money you save a defined purpose helps you decide the best way to make it grow so you can build wealth. Prioritizing your savings goals helps you reach them. Make a solid savings plan today with these tips.
Make Retirement Your First Priority
Nothing is more important than your retirement. To retire comfortably, put fifteen to thirty percent of your income towards it each month. Think about it: you are trying to save enough to live for at least 30 years without earning a paycheck. That is a lofty goal. There is no such thing as a “retirement loan,” and Social Security will likely not be enough to live off of.
Take advantage of your employer's matching 401K program. It is money in your savings without any additional work, and most employers match up to about three percent.
Start an Emergency Fund
Your next priority should be to create an emergency fund. Nothing wipes out money faster than the unexpected: you suddenly lose your job, your car starts sputtering or your roof starts leaking.
You'll get more financial security and peace of mind if you start setting aside money for these emergencies now. Aim to save between three and nine months of your regular income to get through major calamities.
If it is difficult to part with your money each month and send it into an emergency fund, so you should have it deducted from your account each month. You can set this up by visiting your bank's branch or website. After a few weeks or months, you won't even notice it is missing from your paycheck.
Pay Off Debts
You can take one of two approaches to pay off your debt: you can pay down your highest-interest debt first, or you can tackle your smallest debt. It doesn't matter which method you choose as long as you are paying off your balances.
You will pay off your debts faster if you truly live within your means and cut spending on luxury items. Daily coffee trips, for example, add up quickly. Cut back or quit altogether, putting the money you save toward paying off your debt.
Set Other Goals
Once you are actively saving for retirement, have an established emergency fund and are debt-free, it is time to start saving for more interesting and fun things, like a vacation, new car or home.