Think about where you are in life financially at the moment. Are you where you thought or wanted to be? By learning the basics of investing and saving, you can have a better financial future. And it might not be as difficult as you think.
Set Aside 3-6 Months’ Worth of Expenses
As a general rule, most people know to set aside money for an unexpected expense such as car repairs or an appliance breakdown. However, these expenses only tend to minorly inconvenience someone. The true expense comes in terms of job loss, illness, or injury that keeps the individual from working for an extended period.
For this reason, it’s ideal to have at least 3-6 months’ worth of income set aside in a separate savings account. You should easily be able to access this money without any waiting periods or early withdrawal fees.
Some opt to have this money automatically withdrawn from every paycheck into a separate account until they reach the desired amount.
Make Saving a Priority Expense
When you think of priority expenses, you probably think of your mortgage, electricity, student loans, and other similar expenses. It helps to make depositing into your savings a priority expense as well.
Sometimes money is spent simply because it’s thought of as “available.” Therefore, earmarking money towards savings will ensure you’ll actually meet your goals. By making a budget with money designated for spending and saving, as well as bills, you’ll better know where you stand.
As noted by the Bureau of Labor Statistics, the average full-time worker earns $1,128 per week, which is the same as $2,256 biweekly. If you were to save 10% each pay check, ultimately, you’d be saving about $500 a month, which is around $6,000 per year.
Some financial experts recommend setting aside at least 30% of your pay for savings.
Invest Based on Age
There isn’t a set amount you should invest. Instead, consider your age. If you’re young, you can take more risks. However, if you’re closer to retirement age, invest in less risky ventures to ensure you have enough retirement savings. When you’re young, you have more time to recover if an investment goes south.
Think About Seeking Help from a Financial Advisor
Investing isn’t one-size-fits-all. While you should have a diversified portfolio that can withstand some troubled waters along the way, the options are endless. If you feel overwhelmed and researching a bit on your own isn’t enough to help you make sound decisions, don’t hesitate to reach out to a professional financial advisor who can look at your particular situation and find the best solution for you.
If you want to grow your wealth, always prioritize saving overspending. It also helps to get expert advice if you aren’t the most investment savvy.
