3 Important Saving Tips You Won’t Find On the Internet
It’s no secret that saving money can be difficult sometimes, especially when unexpected expenses arise and you have little in the bank to cover them. But what if you had some expert guidance on your side? Things would sound much simpler and accessible, wouldn’t it?
So from creating an emergency fund to evaluating your credit score to finding the best way to save on car repairs, here are three expert guidance pointers that will help make it easier for you to create savings plans that work for you and your money.
What is life insurance?
Life insurance is designed to provide income, funeral expenses, and/or financial protection for your family in case you die before the retirement age or become severely disabled. There are two basic types of life insurances: term life and whole life.
Savings plans provide a death benefit only if you die during its term (typically 10, 20, or 30 years) and are inexpensive because it’s only temporary coverage. Whole-life policies provide a death benefit as well as cash value that builds up over time and can be used for many purposes.
Benefits of life insurance
- Life insurance is an important part of financial planning; it protects your dependents, and family by providing them with a source of income in case you are no longer there to take care of them.
- Savings plans help provide peace of mind and financial security.
- It’s simple to buy, though complex to use.
3 Important Saving Tips
1) Invest Early
It’s never too early to start investing, even if you can only afford to put away a small amount of money at first, says Michael Kitces, Partner and Director Of Wealth Management for Pinnacle Advisory Group.
You don’t need a huge amount of cash to get started; most people start with mutual funds or an S&P 500 index fund.
Short-term investment plans can grow into big ones over time. You just have to let them compound over 40 years or so. If you are young, your biggest financial asset is time, Kitces says.
So take advantage of it by starting to invest as soon as possible in tax-advantaged accounts. And don’t be afraid to take risks: The best way to minimise risks is through diversification, he adds. That’s why I recommend that everyone has some exposure to international markets.
2) Set Goals
If you don’t know what a SMART plan is, it stands for specific, measurable, attainable, relevant, and time-bound. These are guidelines that will help you craft your smart financial goals and keep you motivated as you reach them.
The most important point here is to think about short term investment plans vs. long-term savings: focus on short term savings first so that you have money saved up to support future long term plans such as buying a house or having a child.
Saving more than 10% of your income in short term investment plans can be difficult if you live paycheck to paycheck—but if you start small and make saving a habit, it’ll be easier over time.
Here are some tips for getting started:
- What kind of things do I want to save up for?
- How much do I need?
- What does my budget look like now?
- How much can I set aside each month?
- What kind of return am I looking at with my investments?
- What kind of return am I looking at with my bank account/savings account/CDs/etc.?
- How do these returns compare?
- Is one better than another?
- Which one should I go with right now?
3) Pay Yourself First
It means setting aside a percentage of your income before you pay anyone else—your rent, your student loans, etc.
It forces you to save money without even thinking about it since it comes out of each paycheck automatically. It’s also known as forced savings because you’re paying yourself by taking part of your income out before other expenses are paid.
By paying yourself first and increasing your personal savings rate with every paycheck, you can reach your financial goals much faster than if you were relying on willpower alone.
Setting aside funds for retirement is a great way to create wealth that will benefit you far into the future. But how can you contribute regularly when it seems like there’s never enough money?
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Conclusion
Many experts say it’s important to save money to maintain financial stability and protect your future self from unexpected expenses or emergencies, but exactly how much money you should be saving can be confusing—especially since the answer can differ based on your situation.
