Tips & Advice
Savings Your Key to Success
Presented by Balance
You have wants. You have needs. And you have two ways of paying for them – pull out the credit card or pay with the money you have on-hand. Which would you prefer?
It's a safe bet that most people would choose to have a stash of cash from which they could pay for everything from impulse purchases to long-term financial goals. But how do you save when there are bills to pay and the paycheck only goes so far?
Do It Now
Even without a specific goal, saving immediately will make you feel good. Have debt? Put a little aside anyway. Acquiring a savings habit as soon as possible is critical. By setting a little aside each month while aggressively paying down your obligations, you will graduate into being debt free with a happy little nest egg in place. Likewise, in the event of an emergency, you won't have to touch your credit cards and feel like you're driving in reverse.
Set a Goal
All achievable goals share the same five, SMART factors:
- Specific – describe your goal to the smallest details
- Measurable – how much do you need to save?
- Actionable – break it down into reasonable action steps
- Realistic – could you really achieve this goal in the given time?
- Time-bound – what is the timeframe for the goal?
To maximize your savings, ask yourself: how much money do I have and what's my savings timeframe? This will help you to determine your personal risk tolerance and the best home for your money. A few you may consider are:
- Savings account – A great starter account. Interest and risk are low and minimum deposit is small.
- Money Market – This savings account pays slightly better interest but may require a higher minimum balance.
- Investment and Retirement Planning – Develop a customized investment plan that best fits your lifestyle. Consider investing in high-quality, short-term investments or commit to higher deposits, interest and risk.
- Certificates – Generally a three month to seven year investment commitment, Certificates offer higher and fixed interest rates, but may require a greater initial deposit and penalty for early withdrawal.
For mid to long-term goals, you may opt to invest rather than use the savings vehicles mentioned above. But remember, after you've saved enough in one of the above accounts, you can transfer your money to mutual funds, bonds, or individual stocks if you wish.
Impossible? Not at all. With careful planning, savings is the key to successfully managing your money and getting everything you want.