If you chase money for money, the saying is that you “won’t catch it.” However, one of the key reasons we started writing this blog and – hopefully – the reason you would like to figure out how to better manage money and grow savings, investments and wealth is to manage options later in life. As we tell our children, money equals options. This is why there is so much stress over the healthcare debate happening in the United States today. Healthcare is also options. That’s why it is so expensive.
The truth is that you can build options by developing your own strategy to save money regularly and automatically (not necessarily always the same things). Let’s talk about the word “automatically” first.
How many different ways can you save automatically? There is a 401k plan at work. If you have one and are not “in” yet, check it out at work. You should do what you can to max this out and roll on. If you can’t do that much, pick a smaller percentage and start saving a percentage of your pay “automatically” with each paycheck. However, don’t stop there. You can also (and should) find an automatic way to save into a Roth IRA or a Traditional IRA as well. You can select to save as little as $25 or $50 a month to go directly into one of these accounts. It will build faster than you think. You can also use a drip (see our past blogs) and an automatic monthly investment of as little as $50 to invest directly with a company you appreciate and build stock investment in something you believe in. Of course, there is also the option of dropping money “automatically” from your pay or your checking account into a money market account with someone like ING Direct, T Rowe Price or a similar company.
Now, this is where things get tricky. We say you should be tricky when it comes to your checking account. This is not the same as automatic savings. We say that a checking account is a money laundering account for other people’s money. That’s why you should use any excuse to push money out of your checking account into savings or investment accounts. What kind of excuses? It could be as simple as dropping the amount you would have spent without those coupons into savings. We recommend you do that – of course. In other words – if you save money using a coupon, you DON’T really save unless you put the savings in…..yes, savings.
If you find money (see our blog about the jar of coins in our kitchen), you can push that money to savings. If you negotiate (and everyone should today), don’t miss the opportunity to take the money you “saved” and push it out of checking into savings. If you do stock investing, we recommend that you focus on dividends and push that money back into purchasing more stock over longer periods of time. That is regularly saving.
A WORD ABOUT COUPONS
If you use coupons to purchase something that you ordinarily purchase and need, you are saving money. If you go out of your way to purchase something you don’t ordinarily purchase because you have a coupon, you are participating in MARKETING. Always focus on savings – and always make sure you compare PER UNIT PRICING to make sure your coupon is a deal. Oh, and remember: YOU DON’T SAVE UNLESS YOU TAKE THE AMOUNT YOU “SAVED” AND PUT IT IN SAVINGS.
HELP YOUR OWN CHILDREN – START TODAY
Keep in mind that we feel you should build an emergency savings account that holds – eventually – 15 to 18 months of expenses in interest earning savings (money market or certificates of deposit in an FDIC-insured institution).
In this country we don’t do enough to teach our children about money, managing money, saving regularly (and automatically), compound interest and steady investing for a long-term future. As a parent, we are always concerned that they get a good education and go to a good college so they can make a lot of money or have a valued career path. The truth is that we could do our children the biggest favor and one of the best things by sharing with them sound saving and investing principles.
You can join our free Facebook group (or have your children do it, too) by searching in the Facebook bar on your “wall” for “Live The Lifestyle Your Family Deserves.” Click on “become a fan.” It’s free and it ties our free blogs into that group.
If you want to give your children the same information we are giving ours, you can purchase the only thing we sell on any of our blogs or groups. It’s called “How To Survive Any Financial Crisis” and you can get it for only $4.95 at http://www.middleclassmoney.com.
Thank you for reading our blog and good luck!