As you start your career and work toward advancement, you are likely to hear all kinds of advice about the importance of saving and investing for the future. A healthy savings account and the right investments can help you get through rough patches, buy a home, send your kids to college, prepare for retirement, or pursue other unique financial goals, but saving can be hard.
Ideally, you may want to explore strategies that help you balance fun with savings. Check out these ideas.
- Factor Fun Into the Budget
When creating a budget and identifying savings goals, remember that you need to have fun. For a short time period, you may be able to put every spare dime into a savings account, but for the long-term, you need funds earmarked for fun.
For some people, that may mean paying for cable, while for others, fun may be lunch out or annual vacations. Everyone defines fun differently, and your budget also dictates what you can afford. Just keep in mind that if your budget is too strict, it can be hard to maintain, and by acknowledging the need for fun, you help to set yourself up for success.
- Focus on What Improves Your Life
As you make decisions about your budget, spend some time thinking about what improves your life, and keep in mind that the right answer varies for everyone. For instance, if you know that you feel better with regular exercise, you may want to spend some of your fun money on yoga classes or a gym membership.
Similarly, you may want to budget for lunch out every day if you enjoy the convenience and the ability to meet with friends or colleagues at restaurants. On the other hand, if you prefer the nutritional value of home cooked meals, you may want to cook lunch at home, bring it to work, and save that money for something else. By being mindful of how you spend your fun money, you help to improve your life and increase the likelihood of sticking to your overall budget.
- Identify the Best Savings Strategies
Once you determine how much you can save while also being realistic about enjoying your life, you need to identify the best savings options. To do this, you can start by looking into the rate of return. For instance, if your employer offers a 401(k) plan with a match, you should try to at least invest up to the matching amount. A direct match gives you a 100% return on your investment right away, and that's even before the investment has time to grow.
In addition to taking into account the rate of return on potential investments, you also have to think about accessibility. So that you are prepared for emergencies, you need some liquid assets. A general rule of thumb is that you should have enough money in savings to cover three to nine months of living expenses, but you don't have to follow this rule to the letter.
If you aren't worried about job loss, you may want to keep enough in savings to cover emergency car repairs, broken appliances, or similar unexpected expenses, while investing more into your accounts with the highest rate of return. Additionally, if you're worried about spending cash savings, you may want to put those funds into an account like a retirement account that is harder to access.
Ultimately, you need to remember to take your personal strengths and challenges into account when identifying your goals, creating your budget, and deciding how to save. Factoring in your personality and remembering to think about fun can be a very important but often overlooked part of a successful savings strategy.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investment(s) may be appropriate for you, consult your financial advisor prior to investing. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and cannot be invested into directly. No investment strategy or risk management technique can guarantee return or eliminate risk in all market environments.
The information provided is not intended to be a substitute for specific individualized tax planning or legal advice. We suggest that you consult with a qualified tax or legal advisor.
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amount to keep in savings: https://budgeting.thenest.com/much-should-liquid-cash-20823.html