Ah, finally things are back to normal! Hopefully you all saw my “Out Celebrating…” post on social media last week. I didn’t actually intend to skip a blog post, but honestly with all of the lunches, dinners, and my 80s Karaoke party, I was one exhausted little girl by Sunday (I was an 80s singing machine last weekend). So now that the birthday celebration mayhem has fully died down, I’ve been thinking about life in my 30s. When I was in my 20s, I always knew I’d love my 30s because I imagined having a great job that I was successful at (✔), a loving husband and growing family (still working on it), and a wonderful support system (✔). Yes, I have been really blessed, lucky, fortunate (whatever you believe in) to accomplish a few things on that list, but I never thought too much about saving money. When I was young (and stupid), I racked up credit card debit, carried tens of thousands of dollars of student loan debit, and almost ruined my credit; I didn’t think about saving or planning for the future at all. Now that I’m in my 30s and a little over 30 years away from retiring, I see the importance of saving. So this week, I’m going to give you some saving options that will get you a head of the curve and get you planning for the future without worry!
Before I dive in, I’m going to make this as informative, yet fun. When talking about money, it can be really heavy and that’s not the mood I’m going for; I want you to know the benefits of saving without fear or feeling broke as a joke. So as you go through this info, I’m starting with what I personally feel is the most important to start with, but know that these are all important!
Saving with Big Girl Panties On!
Saving for those non-working years is crucial!! I’ve seen horror stories of retirees clinching to their social security or a light savings that doesn’t seem to cover the basics. That’s not my idea of how I want to live in the older years, so at 25 years old I took full advantage of my company’s 401K matching plan ! Let me stop here and explain what a 401K plan is; this is a workplace savings plan where your employer takes a portion of your paycheck to invest into stocks & bonds. The great thing about a 401K is this money is pre-taxed with the ability to grow tax free until retirement. Now I mentioned earlier that my company matched my contribution to my 401K plan, which means that up to a specific amount or percentage, my company would match what I put in to the account (aka FREE MONEY)! It’s crazy how many of my friends ignore the fact that they have the option to take part in a 401K plan when there’s free money on the table.
Once I was set up with an account then came the hard question… how much should I contribute? For me, it was difficult because I wasn’t making tons of money and was living paycheck to paycheck when I started my 401k. The one thing I did know was that my company at the time was match up to 3%, so I had to put that amount in to get the full benefit of the matching program. Clearly, I do not know what your finances are like, but my best advice is really look at your finances and contribute as much as you can. If it’s only 2% of your annual pay or you feel like you can swing 15%, then do it, but if your employer is matching up to a certain amount or percentage, try your hardest to contribute up to that amount/percentage.
If you’re employer doesn’t offer a 401k plan, but you still
want need to save for your senior citizen’s condo in Florida, an IRA (Individual Retirement Account) is an awesome way to save money for retirement. The most important thing about an IRA is that there are different types that you can chose from, but the two most common IRAs are: a traditional IRA or Roth IRA. A traditional IRA is really similar to a 401k where tax comes out when you make a withdrawal. The Roth IRA has you pay the taxes on the front end and when you want to withdrawal funds, it’s tax free! Both are great options, but it’s really up to your preference at the end of the day. You can go to your local bank or credit union to get set up with a financial advisor to get you started.
Whatever choice you make (401k, IRA or both), remember that you have to be comfortable with how much you contribute and how much risk you’ll want to take with the investments (anything from aggressive to conservative). If your head is still spinning from the info, the best thing you can do is research! This article on Fidelity.com is really great for more info on all of the retirement saving options I mentioned.
Big Ticket Savings
Want to buy a house? Get married? Go back to school? Maybe take a well deserved vacation? We’ll if you want to get to the point of buying a big ticket item, you need to start saving, Ladies! Of course, it’s a little easier said than done to save thousands of dollars, but the pay off is clearly so worth it.
Let’s start with what kind of accounts are good for big ticket items. We all know about the basic savings account which is great to put money away, but for me I am notorious for dipping in to my savings (I know, it’s the worst!). Of course, you have to check with your bank or CU, but a savings account that gains interest, like a CD or Money Market, is the best option for saving for these kinds of items. A CD (Certificate of Deposit) is an account with a fixed interest rate that you can deposit money into for a set amount of time (the term). If you decide that you need withdraw funds before the date that the account matures, you’ll have to deal with penalties. A Money Market is an account that usually has a higher minimum balance, but the account allows for monthly withdrawal (6 per month), so if you need to access money quickly this is a good option! Depending on what your finances are like, these are great options. To get more info on rates and terms, check with your bank or CU; I would recommend checking out a few other financial institutions as well because you never know who has the best interest!
Now that we’ve covered the best accounts, we gotta talk about how to save money. The easiest way is take a percentage or amount of your paycheck (not a bad idea), but cutting back on something small a good way to add to the stash. One of the things I do to add money to my account, is any commission or expense checks that I get from work goes right into that account. I use to think “Woo hoo extra cash,” but honestly saving that small amount of money has helped to grown my account. Another idea is cutting back on a vice you might have (Starbucks lattes, lunch out, or that weekly mani/pedis sesh). I’m not saying no more morning coffee at Starbucks, but if you cut back from 5 lattes to 2 a week, you will have an extra $10-15 for your account (that’s up to an extra $60 a month). A great suggestion I heard from a friend years ago was that she puts $10 a week for her coffee habit and once it’s gone, then no more fancy coffee for the week. If she had money left over from the $10, it went into a little jar and was deposited into her CD each month. Smart, right?
There are TONS of way to save, so take some time evaluate several things when before you start saving.
- What are you saving for and how long do you want to save for? Having a timeline is great because it’ll keep ya on task with saving and will help you determine how long you want the term of your CD to be if you go that route!
- Do I want to dip into this savings account at any point? This will make a difference on what account to start.
- How much money do I realistically have to put towards starting an account? This will also help to determine which account is the best for you.
- What percentage or amount should I put towards the account each month? Look at your expenses and go with what makes you most comfortable! No one wants to put a ton of money in their CD and then are stuck eating cup of noodles to survive. Make sure that you’re still living the lifestyle you want to live.
- What extra expenses can I cut down on? Look at your habits that aren’t necessities and try to cut down by 50%. And either put the saved money into the account at the beginning of the month or in a “piggy bank” to deposit at some point in the month.
F*ck Off Fund
Yes, it sounds a little crude, but it got your attention, right? I once went to a convention and heard the BEST advice about money: “Always have a checking and/or saving account that’s yours. And when you get married, remember that your money is your money and his money is your money!” It sounds a little bitchy, but I LOVED it! I personally feel, as women, we need to be able to take care of ourselves. You know you’ve heard or have seen stories of friends or family members who get stuck in situations (divorces, crappy jobs, medical emergencies, or other things) and they have nothing to keep them afloat financially. If you haven’t heard of these kind of situations, then you need to read this article in Women’s Health that came out this week about having a F*ck Off Fund!
This doesn’t need to be in a special account or anything, but you do need to be able to access it quickly if something happens, so I recommend setting up a basic savings and checking account at a different bank than where you normally bank at. I have this set up now and a portion of my paycheck is directly deposited into the accounts each pay period. I have a debit card and checks for emergencies, but I really try to stay out of that account at all costs. It seems like a lot of work, but like I said earlier, I’ve been known to dip into my saving account and it’s nice having a peace of mind that I have a nice little cushion if things go array. Clearly, we don’t know whats going to happen in the future, but keeping a fund like this will definitely a little added finance security that you might not know you’re missing!
Do you feel like you can put on those big girl savings panties and start saving like an adult? I hope that this information will get you started on the right path of saving. The two thing that I really want to stress is that you have to be fully comfortable with how much you’re putting into your savings accounts and ask questions! Do not let a fast talking financial advisor talk you into something that you’re not sure about… this is YOUR money and you have to do what’s best for you and your future. Do you have any tips on saving that you swear by? Share them below in the comment section! I know that this information I shared is only a starting point for all of us to be financially secure.