For many most of their financial problems stem from what they do with their money rather than how they acquire it. In fact, statistics show that 1/3 Americans have saved $0 for retirement *1.
Why start saving?
While saving isn’t always the “sexiest” thing to do with your money, it is important to save now to ‘save’ yourself from problems down the road. All experts agree that regularly setting money aside promotes a stable future while providing a safety net in case of emergencies.
How much should I be saving?
Most financial advisers recommend at least 20% of your income should go towards saving. It is important to pay yourself first, meaning save before you spend. People who wait to save what they don’t spend ultimately don’t save any money. You should start by creating a monthly budget and track your spending and saving so you can plan better!
What should I do with my savings?
Hint: don’t store it under your mattress. The younger you are, the riskier investments you want to make. These investments are going to augment over time. If you’re looing for safety, the safest place to save money is in a savings account at any bank. Even though these accounts pay very low interest rates, it is important to keep some money in a savings account as it the safest way to save money and is relatively liquid.
What about investing my savings?
Although it is not technically considered saving, investing money periodically can help you save money while earning a passive income and prepare for the future. Investing is riskier than saving, but when investing you have the chance to receive much greater returns than a savings account. It is important to do your homework before investing.
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*1 A Time Magazine