Millions of Americans are saving more than they have in the last ten or more years. Look around on the internet or check out the blogs and you will see that the savings rate has reversed itself. However, you must ask an important question: How much savings is enough?
The question has a serious answer, and that is the topic of today’s little blog.
Warren Buffett said the other day that the economy has not hit bottom yet. Just hearing him say those words gives me a negative chill that I had hoped would have passed last October. He is in a very unique position to tell the temper of the country’s economy. At the same time, you only have to ask a few questions of anyone seriously involved in Walmart’s business, shipping or import/export in the country.
How much savings is enough? No savings is enough. There isn’t an amount of money that will make you safe in this or any economy. However, there isn’t enough because THAT IS THE WRONG QUESTION.
It is not enough to save. It is not enough to reverse your savings patterns of the last decade or more. In today’s environment (and especially the future), you must develop a plan for saving regularly and investing regularly over the balance of your life.
We recommend that you focus on these areas:
1. Emergency Savings Fund – build 15 to 18 months of expenses in this fund. The first six months should go into a money market savings account. The balance should go into cascading certificates of deposit with the best possible interest rate.
2. Reduce and then eliminate debt. This is difficult if you have grown into the lifestyle of what we call “credit is king.” However, you can systematically reduce and then eliminate debt by focusing on the high interest credit card debt first. Then, use your steady strategy to reduce each debt until you are debt free. It may seem like a mountain at first, but you can do it. We also teach other ways to reduce and eliminate debt in “How To Survive Any Financial Crisis” (we only charge a one time fee of $4.95). Get it at http://www.MiddleClassMoney.com.
3. If your company offers a 401k, do it. I know a lot of people have really seen “shrinkage” in their investments, but 401k investments are about the long-term. If you are not retiring in the next 15 to 20 years or more, you should stay engaged in this activity.
4. Force yourself into a Roth IRA or traditional IRA with a regular and automatic deduction from your pay. This kind of forced savings is a path to safety for your retirement. Use the path.
5. Refocus your mind to see your checking account for what it is: A money laundering account for other people’s money. Use any trick to remove money from checking and push it to savings or investment regularly. Get an extra $20? Push it out to savings.
6. The number 1 way you can systematically build wealth is to focus on building assets. This requires you to watch your spending on liabilities and use any trick to push money into dividend performing stock or some asset that builds upon itself.
7. With any investing you do, watch out for fees. Work to reduce your costs. There are many people in personal finance that design what they call “Sticky Assets” to feed off of their clients. Learn yourself what any broker is doing. If you feel confident enough, check out Money Magazine and Kipplingers. Read up on mutual funds and fees. Be careful to create balance in any purchase of assets and realize that short-term is always more unstable and you can always lose money in the stock market.
8. Negotiate. If you don’t, you lose. Simple. Easy. The truth. Learn more about this in “How To Survive Any Financial Crisis” (only $4.95 at http://www.MiddleClassMoney.com).
No one can guarantee good results. Investing in stocks will show you rise in value and sometimes falling value. You must know the difference between short-term savings and long-term investing. Don’t risk money you cannot afford to lose.
THE BOTTOM LINE FOR YOUR FAMILY
Do not just allow your family to “swim with the sharks.” Take action and save your family by building your own smart financial plan for saving regularly and automatically. Invest. Learn. Watch fees. Don’t depend on one resource (or even two) for retirement.
Join our FREE Facebook group called “Live The Lifestyle Your Family Deserves.” Check out our main blog and sign up for our FREE monthly e-saver at http://www.stickyasset.com/blog.
If you are serious about building your plan for saving more and investing wisely, consider purchasing “How To Survive Any Financial Crisis” for only $4.95 at http://www.MiddleClassMoney.com.
You can act now or pay later. Chances are that you will be smart if you are reading a blog like this one. Take action. You can do this. Develop your own plan using these tools above, our free blogs and e-saver and more. Education is the key to a more balanced life and building wealth the right way.
Join the FREE new Facebook group “Live The Lifestyle Your Family Deserves.” Make sure you invite friends, family and those you care about to join, too.