bryant
What is the best way for long and short terms saving for new adults?
how should we prepare our self so that we can be financially stable as possible thru out our lives? Also if tragedy strikes how to combat it head-on. #money-management #money #savings #financial-planning
6 answers
Nicole Crockett
Nicole’s Answer
Long term, take 10% of your paycheck and save it, but do not just throw it into a savings account. Put it into an account where you will receive a reasonable return, like a retirement account or a brokerage account.
Good luck!
Fiona Wang
Fiona’s Answer
Short term: live in cheap rent neighborhoods with roommates or live with your parents. Rent is by far the biggest monthly costs and you can save significantly by not spending 50% of your income on an apartment.
Long term: set up a budget for yourself, whether it's a monthly budget or a yearly budget, it helps keep expenses in check and provides yourself a target to work for in terms of how much savings you want to have at the end of the year. It's also helpful to set up a monthly automatic savings withdrawal plan BEFORE you pay your expenses. This way, you prioritize savings before spending, which is another way to help build that safety nest.
Olena Lytvynenko
Olena’s Answer
First, its important to have an emergency fund, a bit of money saved for any unexpected expense. Many financial professionals recommend saving enough money to cover 3 to 6 months of living expenses. Some recommend saving more than that but it all depends on your own situation. I know that saving can seem hard (especially when things are tough financially) but try to start small, whatever you can afford, and then build your way up.
Also, you want to keep track of your expenses and spending habits. Spending money without thinking is easy but it can definitely get expensive! But once you see where your money goes, you can take steps to change your spending habits for the better.
Next, create a budget and stick to it! Pen and paper, Excel, free budgeting apps (like Mint or Fudget) are all good ways to do this. If you spend more than you earn, cut out any unnecessary expenses or try to increase your income.
Think of some goals for yourself: short-term (12 months or less), intermediate-term (1-5 years) and long-term (5+ years). Come up with something motivating! The only way I can talk myself out of making an impulsive purchase is to remind myself of my goals. Of course, future me would rather go on a vacation instead of having spent money on countless coffees from Starbucks! :-)
If you have credit card debt, try to pay the balance in full each month. If that's not possible for you at the moment, try to pay as much above the minimum payment as you possibly can - especially if your interest rates are high. If you really can't make a payment, call your credit card company to negotiate...some companies let customers skip a payment once per year. If you usually make all of your payments on time but accidentally missed one by mistake, call your credit card company. For first-time offenders, they're usually able to waive the late fee and the interest charge.
Also, think about starting to save for retirement. When you're young, it may seem like such a far-away problem but the sooner you start, the better off you will be! If you're employed, find out if a company-sponsored account is available to you. If not, you can open an IRA on your own. Of course, different account types exist, each with their own restrictions but the important point is that they all provide a way for your money grow along with various tax advantages. And the earlier your start, the longer your savings can compound tax-free, the more your money will grow, the more you'll have in retirement!
Lastly, it may not always be fun but learning about personal finance will greatly increase your chances of success...even more so, if you'd like to be rich one day! Whether you'd rather take a class, read a book, attend a seminar or just talk to a financial professional, learning how to manage your money will be a huge benefit to you for the rest of your life.
I hope this helps! Good luck!
Sheila Jordan
Sheila’s Answer
It's great that you are thinking about saving short and long term. You've received some awesome advice from previous posters and I'd like to share with you a great article on 20 Practical Ways to Save Money . . .
1) GET OUT OF DEBT - Monthly debt payments are the biggest money zapper when it comes to saving. Debt robs you of your income!
2) CUT DOWN ON GROCERIES - Most people - after they do a budget - are shocked to find out how much they’re actually spending at the grocery store each month.
3) CANCEL AUTOMATIC SUBSCRIPTIONS AND MEMBERSHIPS - Chances are, you’re paying for multiple subscriptions like Netflix, Hulu, Spotify, gym memberships, trendy subscription boxes and Amazon Prime. It’s time to cancel any subscriptions you don’t use on the regular.
4) BUY GENERIC - One of the easiest ways to save money is to give name brands the boot.
5) CABLE - Cable isn’t the only way to watch your favorite shows these days. Look for network apps and streaming services.
6) SAVE MONEY AUTOMATICALLY - Save money without thinking about it by setting up your bank account to automatically transfer funds from your checking account into a savings account every month.
• TIP: This is one of my favorite AND easiest ways to save money effortless; especially for special occasions, vacation, holidays (ie, Christmas gifts, etc). Set an amount either weekly, monthly, bi-weekly, etc. depending on your finances.
7) SPEND EXTRA INCOME WISELY - When you get a nice work bonus (way to go!), inheritance or tax refund, put it to good use.
8) REDUCE ENERGY COST - Make a few tweaks to your home. Start with some simple things like taking shorter showers, fixing leaky pipes, washing your clothes in cold tap water, and installing dimmer switches and LED light bulbs.
• TIP: We changed out all the light bulbs in our house to LED years ago and it is a huge savings on our bill.
9) UNSUBSCRIBE FROM EMAIL - If you just can’t resist shopping when you see a special offer, click the "unsubscribe link" at the bottom of the email. You’ll be less tempted to spend, and your inbox will be a lot less cluttered.
• TIP: Over the past month I cleaned up my email by unsubscribing to many marketers. Within a few days I've noticed how "less" traffic I'm receiving, which helps with temptation to click on their product.
10) CHECK YOUR INSURANCE RATES - Review your rates often.
11) PACK YOUR LUNCH - You can save quite a bit of money just by packing a lunch.
12) ASK ABOUT DISCOUNTS (PAY IN CASH) - You never know until you ask—and you should always ask.
13) TAKE ADVANTAGE OF YOUR RETIREMENT SAVINGS PLAN - Talk to your HR department to set up an account.
14) LOWER YOUR CELL PHONE BILL - Find ways to cut back on your cell phone bill by getting rid of extras like costly data plans, phone insurance and useless warranties.
15) TRY A SPENDING FREEZE - Don’t buy any nonessential items for a week—or even a month.
16) DIY . . . EVERYTHING - Think about doing home projects yourself instead of hiring someone. Usually, the cost of materials and a simple Google or YouTube search will save you a ton of money on your latest home project.
17) SKIP THE COFFEE SHOP - Make your coffee at home.
18) CHECK OUT THE LIBRARY - Before you click “add to cart” on that brand-new book, check your local library to see if you can borrow it! Most libraries also have audiobooks and digital copies of your favorite books for rent.
19) TRY A STAYCATION - Try being a tourist in your own city.
20) SELL EVERYTHING (THAT YOU HAVEN'T USED OR DOESN'T BRING YOU JOY) - Declutter the things in your home that you don’t need and are willing to let go of for the sake of your financial future.
TIP: This is another one of my favorite tip. Although I didn't sell my things I donated it to charity.
I hope you found this article useful in your journey to save money. I wish you much success and best of luck to you!
Sheila recommends the following next steps:
Nicole Hutak
Nicole’s Answer
When it comes to budgeting, look at the total income you're bringing in for the month. There are so many helpful apps nowadays that can help with budgeting like Mint. About half of that should be dedicated to cost of living. This includes stuff like rent, utility bills (like trash, gas, electric, water, etc). You can also lump groceries in this category too (I'll touch on that later!). Now you need to think about other bills or payments that are due every month like phone bill, car payment, car insurance, health costs, etc. These are all of the things you absolutely must pay so that is the necessary part of your budget. Ideally, you will still have some money left which is where savings and entertainment come in. If you don't have any money left after all necessary things are paid, then this means you need to cut down in an area. Some ideas to do this: spend less on groceries by planning out meals and working to reduce the amount of waste produced (aka don't throw away stuff! Find a way to eat it), have a roommate to cut down on cost of rent, search for a cheaper phone or insurance plan that still meets your need, etc.
Back to the money that's left after you pay bills: now is where you ask yourself how aggressive you want to be with saving. Do you want to try to buy a new car one day? Do you want to go on vacation? Do you want to buy that cool new pair of Jordan's? None of this is possible without saving. Another savings goal that I recommend having is something called a "safety net". This is about 3-5 months of money that can be used to keep you afloat if something goes wrong. This safety net can be used if you lose your job but still need to pay all those necessary bills I talked about earlier. This safety net is a great way to be prepared for tragedy. When it comes to savings, I recommend a 70/30 split. This means you save 70% of the amount remaining and use the other 30% for entertainment. This could be dinner out with friends, movies, concerts, new clothes, etc. Keep in mind: you don't need to spend your entertainment money right away!
Another way to save and make sure you're set up for retirement (a 50+ year savings goal!) is to immediately start contributing to your 401k at work if your company offers it. If they don't (or even if they do), look into opening a Roth IRA and contribute to that as well. Even if you don't understand the intricacies of an IRA or 401k, opening an account early means that you put money in early which means you'll start compounding your money earlier which will just mean more money for you in retirement!
When it comes to credit cards - they are NOT free money! Make sure that you are not purchasing beyond your means aka make sure your purchases are either able to be paid off that pay period or that you have a financial plan on how to pay off the balance. Credit cards are a great way to build credit and set yourself up well for the future but only if they are cared for and excessive debt is not accrued.
Nicole recommends the following next steps:
Simeon Snow
Simeon’s Answer
For emergency expenses, do absolutely everything you can to avoid taking on debt. It's a lead weight, not a life raft. For car loans and such, if you have been paying consistently, they can work with you to let you skip a payment for the coming month to help you keep some more cash on hand. Medical expenses can be put on payment plans.