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How to Start Saving Money for the Future

By SDCCU , 20.12.2019 Financial Education
Happy couple drinking coffee with businesswoman How to Start Saving Money for the Future
Getting a hold of finances can help set you up for the rest of your life, but what does that entail? Sometimes saving money can feel impossible and can be a struggle for most. Let us walk you through some of the basics on how to get started.

Why is it Important to Save Money?
You cannot predict the future; therefore, you don’t know what financial obstacles and challenges lie ahead. Saving money and creating a financial plan can help prepare you for financial emergencies in life, and keep you secure in your current situation and even into retirement. It’s never too late to start saving money for the future. Here are some things to take into consideration when learning how to save for the years to come.

  • Budgeting: It is not about how much money you have but what you do with it. Setting up a budget is key to financial success. If you don’t have one, you may get to the end of the month and wonder where it went. When you have a budget it is easier to set goals and reach them. Try making it a habit to check you bank accounts first thing in the morning or at least once a week. This allows you to know where you are at on your budget, avoid over drafts and help you quickly notice fraudulent charges.

  • Savings: Setting up automatic deposits makes saving easy and effortless. It is advised that you should save 20% of your paycheck, but with high student loans or consumer debt it is not always possible. Save what you can. Having goals can make it easier to limit spending in aspiration for a better tomorrow. Also being sure you have at least $1,000 in an emergency fund can save you from financial strain down the road. Try advancing on savings with a share certificate or money market account. A certificate will give you a higher return and hold your money for a certain amount of time. A money market generally offers a higher annual yield versus a savings account. Both require a certain dollar amount. Make sure you know all your terms and details before signing up. If you are lucky enough and happen to come into money, it is also a good idea to save it for a rainy day. Decide what you want to do with a windfall before blowing it all. You are bound to receive some sort of increase in income from a gift to a raise. Avoid spending all of it and plan ahead on how you can make this money work for your goals.

  • Retirement: This may be something that does not seem like a necessity, but it is the biggest savings you will need. If you don’t start right now, you may not have enough to retire. Compounding interest is your friend and the only way it can truly work is with time. This means that if you don’t save enough, the end of 9-5 is never going to be near and you may be working well into your late 60s and beyond. Work your way up to saving 10% of your pre-tax salary for retirement (including any company match), it isn’t easy so start small and push yourself to make this goal.

  • Investments: Once you have a budget, emergency fund and started saving for retirement, try investing your money. This can be in the stock market or through real estate. Create passive income and let money work for you. Investing money can be scary if you don’t know where to begin so start small and test the waters. Once you get the hang of it, you may wonder why you never did it before. Get help from one of our Financial Advisors.

No matter where you are in life, it is always a good idea to review your financial footing. Obtaining these financial breakthroughs help make sure you are not only living within your means, but you are able to manage your finances through the years.

Visit our Financial Knowledge Blog to learn more tips on setting up a solid financial future or join us for Financial Wellness Wednesdays.

 
 

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