Everyone should start saving and investing money because there are situations that call for you to have a lump sum of money available instead of going into debt. If an emergency arises such as car repairs or if home improvements are needed having money on hand will allow you to handle these situations. After you retire you will still have living expenses but your income will be reduced substantially; having money saved will allow you to retire with a peace of mind. Saving money will allow you to meet your financial goals and become financially independent if the money is invested wisely.
Start listing all of your financial goals on paper that you want to achieve in the short term and long term. These things can be the purchase of a home, become debt free, save up $30,000, buy a car, save for college or retirement.
When your list is complete set some deadlines as to when you want to accomplish those goals. Saving is important because without a written game plan there is a good chance you will not get started with your plan.
For each financial goal see how much is needed to get there then divide the amount of money by the years needed to get there. If you want to save $15,000 in 5 years, then divide $15,000 by 5 years and you need to save $3,000 per year. Breaking this down further reveals you need to save $250 per month.
The earlier you start saving the better. If you save $100 per month at an interest rate of 6% for 40 years you will have $200,145. On the other hand if you save $100 per month at the same rate of interest for 35 years the amount you will have saved is $143,183. This situation can apply to the person that starts saving at 25 years old versus the person that doesn’t start saving until the age of 50. Assuming 65 as the age of retirement a 50 year old will only have saved $29,227.
Even though the economy is down right now it will bounce back. A lot of people have lost huge fortunes in the stock market and some won’t be able to recover that lost money especially if they are close to retirement age. If that’s the case then you should contact your financial advisor or financial planner to see what avenue you should take. There is still no better way to prepare for the future than by saving and investing your money.
Once you have all of your goals and objectives set up contact your financial advisor and they will be able to help you solidify your plan. A financial advisor will be able to help your adjust your plan by making the necessary adjustments and prepare you for any obstacles you may incur.