Get in the habit of saving more by putting more money aside for these big events.
An Emergency Savings Fund
This is more than just “saving for a rainy day.” This fund will cover you if you’re laid off from your job or face an unexpected health or financial emergency. Try to have at least three months saved.
- Start Small: If you don’t have much to put in, put aside whatever you can, no matter how small. It’ll add up over time.
- Treat It Like A Bill: Make your emergency fund part of your monthly bills. When all of your bills are paid, move any remaining funds into your savings account.
- Save Your Savings: When you pay off or save some money on a bill, put the amount you would normally set aside for that expense into your emergency fund.
A Down Payment On A Home
The larger your down payment, the more equity you’ll have in your home. Saving takes time, but be patient and focused on the end goal of homeownership.
- Open a Savings Account dedicated to your down payment fund.
- Automatically Transfer money each month.
- Save Your Tax Refunds, inheritances and any other windfalls.
- Look For Opportunities To Make Money, whether its doing overtime at work or taking a second job.
Your Children’s Education
If you want to pay for your children’s education, it’s best to start early.
- Contribute to a Tax-Advantaged College Funding Plan, such as a 529 College Savings Plan or other qualified tuition programs. Invest after-tax money into the plan and withdraw the funds tax-free to use toward qualified education expenses, college tuition and books.
- Open a Custodial Account, such as a Coverdell Education Savings Account, to cover any educational expenses, including those for K-12 costs and private school tuition. Be aware that income and contribution limits may apply.
- Use Roth IRA as a College Savings Tool. Contribute after-tax money and investment gains that can be withdrawn tax-free later. You can withdraw funds tax-free and penalty-free to pay for qualifying educational expenses after five years; however, some income and contribution limits may apply.
- Look Into Prepaid College Tuition Plans, which allow you to lock into college tuition now at current prices with a participating school.
- Encourage Your Child to Save. Whether its birthday and holiday money or their own earnings, advise them to put as much as possible away for college.
Maintain your lifestyle in your golden years with thse tips.
- Maximize Your Contributions to your IRA and 401(k). The older you are, the more you’re allowed to contribute to “catch up.”
- Put 10-15% of Your Annual Income into a retirement account, if possible.
- Invest Wisely; many retirees live on the interest accrued on their investments.