Sometimes our finances can become overwhelming to keep track of. And starting a savings account is the last thing on our minds. But it’s necessary to avoid living from paycheck to paycheck! It’s also a great life and academic lesson for our kids to learn.
Here’s where to begin saving:
- It could be as simple as a piggy bank – If you are living paycheck to paycheck, having a piggy bank for you and your kids is a great way to start saving. It could be for change left over, found money or from part time jobs, chores and gifts.
- Make it automatic and a habit – Every time you get change from shopping or chores, save it. The ideal is to put away 10% of each paycheck. If that’s not possible try 5% – any amount. The sooner you start saving the more money you’ll accumulate.
- Make the mental shift – Save instead of spend. Think about this, if you saved and invested your money from not buying that bottle of soda how much would it be in 15 years? A few hundred dollars? Then multiply that by how many bottles of soda you buy in 15 years. It’s probably enough to help you retire!
- Open a free savings account – Once you get used to saving, don’t hide it under a mattress. Formalize the process and open a savings account with your local bank. Make sure that the account doesn’t have a fee associated with it. Again, the process of opening and systematically putting savings away is a great life and academic lesson for your kids.
- Set a goal for your savings – Save up for a new bike, a trip or even money for college. The process of setting a goal may mean that you’ll have to create a budget, calculate interest, figure out how much things cost, etc. All this means you’re on your way to mastering the art of savings.
- Start a Roth IRA retirement account – It’s a special retirement account that allows you to earn interest tax-free, and make tax-free withdrawals after age 59-1/2.
The key to savings is to start now, to make it a habit and to set goals for how you plan to use your money. These simple tips will get you on the right path to financial security. As your savings grow, find a trusted financial advisor to help take you to the next level.