The importance of Saving

Think of the word SPA…… bet you thought ‘relaxation’.  Well, relaxed is how you’ll feel knowing you kept Saving Pro Actively, and have saved for emergencies, both long and short term, as well as having a cushy nest egg to relax and spend your retirement years. Your mind will be at ease knowing you can handle an emergency without the stress of the financial burden it carries, and also knowing you’ll be able to live a lifestyle you’ll enjoy after working all those years.

To do this, all along your working years, you need to save a part of your earnings for various reasons.  That’s why it is imperative that you start early and  ‘pay yourself first’ when budgeting your income.  Keeping separate accounts for each type of need means you’re less likely to dip into the wrong account.

• An Cash Reserve ‘Cushion’ Account:  This account should equal at least 6, but better yet 9-12 months of expenses should you lose your job, need unpaid medical leave, or any other reason you no longer have a paycheck coming in.  Should that happen, funds there are for those necessities only: rent/mortgage, food, utilities and insurance.  It is an Emergency Account, and as such, should not be used to dine out, or for entertainment, shopping sprees, etc. When you return to work, beginning with the first paycheck, start replenishing the account for a future emergency.
• Diversified Retirement Accounts:  There are several, 401, Roth, Annuities, CD’s just to name a few.  You need to do your due diligence, and figure which is the right one(s) for you in your retirement years. Financial Advisers are plentiful, so you should interview a few and find one you trust and are comfortable with.  Ask if he/she is a Fiduciary.  A Fiduciary is an adviser who is serving your best interest.
• A Liquid ‘What If’ Account:  This would be used for a short term unexpected expense…. new tires, refrigerator, a plumbing emergency etc.  And again, when money is taken from it, that amount, and more if you can, should be replenished as quickly as possible.
• Children’s College Funds:  There are particular college funds, but they have specific rules and should be thoroughly understood before you open one.  Or a regular money market account can be added to, then along the way, rolled into a CD, repeating this process again at the maturity of the CD.  There are several options…. always check the interest rates.  And remember, if you start one for one child, you should start one for each child…it’s only fair.