Do you have enough savings? Does anyone? Many websites and even financial magazines have stories about how you are supposed to sacrifice your lifestyle to put away more money for your future. A decade ago this conversation might have been about retirement savings, but today that conversation is about emergency savings and short and medium range goals along with a retirement that seems to be slipping to an older and older age.
Here’s the deal. You have to balance your life and live for now and save for later. Saving is not optional, but many of us don’t think about savings until we are middle-aged.
Now is the best time in your life to put your own plan together for building a financial life. Get started now by reviewing your expenses. Focus on moving money from spendable accounts (such as checking) to saving accounts (such as money market savings and investment accounts). Just make sure you start your plan with debt reduction and emergency savings.
Where are the good guidelines?
EMERGENCY SAVINGS NOW
For 2010, you should build an emergency savings fund of 15 to 18 months of expenses. Don’t worry if you don’t have this today, but begin working toward it as a goal. You may want to use our 1% strategy (look in previous blogs to see how to do this). The main issue is this: If you save regularly and automatically, you will build savings faster than you realize.
DEBT REDUCTION AND ELIMINATION – CREDIT CARDS
Try to reduce and eliminate your credit card debt over time. This should be a constant goal until you have eliminated these people from your “debt life.” Credit cards are the devil. You can’t own a credit card – CREDIT CARDS OWN YOU. So, don’t cut them up. Stop using them to spend. Reduce the existing debt. Evacuate the cards themselves to a safe in your home to reduce the temptation of “easy credit” (if there is any such thing in 2009-2010).
DEBT RATIO TO INCOME
Work to reduce overall debt ratio to income. You should try to get this ratio below 29%. Again, set it as a goal – you will be surprised how quickly you can achieve the goal.
USE EVERY SAVINGS TOOL YOU CAN LEARN ABOUT
Look for opportunities to save money on things you ordinarily purchase. Remember: If you purchase something you don’t really need with a coupon, thru negotiation or because it is “on sale,” you have not participated in SAVING – you’ve participated in MARKETING.
If you don’t actually really send the amount you “saved” to actual savings, you trashed it again. Savings is only when you move something from checking or a spendable account to a savings or investment account or vehicle.
Saving is savings. If you are saving money but not putting it in a savings account, YOU ARE NOT SAVING. You are kidding yourself.
Don’t kid yourself. Work to always reduce debt and begin putting more money into the production of more assets. The more you can focus on saving and investing after your basic living expenses, the more you can gain ground with real assets that produce more assets and eventual wealth.
Are you ready to grow wealth?
MORE THAN A GOOD EDUCATION
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!