![]() ![]() This means you’re responsible for saving the enormous amount needed to fund a comfortable retirement. Pensions have been disappearing over the last few decades and have been replaced with 401ks. This is why it’s so important to be aware of budgeting tips and money saving tips so that at the end of the day you’re saving money. While Social Security may provide some income during retirement, it won’t allow most people to continue living their normal lifestyle after they retire. Then you have to pay interest on the debt you borrow-and it may take months or years to pay that debt off. Without savings, you’ll have to turn to debt to get access to the money you need. If you don’t have an emergency fund, something going wrong can be a disaster. You might even lose your job in a competitive economy. Your car could break down at the worst time. Unexpected injuries can result in hefty medical bills and lost income if you can’t work. Real Estate Investing (or just buying your first home!)įinancial emergencies don’t always give us time to prepare for them.And third, you also need to save for investments which can include: So now that you’re aware the pitfalls of saving without a purpose, it’s time to tackle another personal finance question: why do you need to save?įirst, you need to save to protect yourself from financial emergencies. Here’s why: the interest rate of many savings accounts is actually less than the inflation rate.īefore we break down how much should you save each month, it’s important to understand that you need to save with a purpose. While today’s inflation rate isn’t as high as it has been in the past (it’s currently about 2%), it can still eat away at your savings. Inflation is the price increase of goods (like food, gas, and housing) over time. While it’s nice to have money in the bank, it actually usually loses value over time thanks to something called inflation. Protecting Your Savings Against Inflationįirst, saving just to save won’t get you very far. Saving money is a critical part of improving your personal finances.īefore we talk about the 20% minimum, let’s go over why we save in the first place. But if you can’t save at least 20% of your income each month-you NEED to focus all of your attention on making more money. How much should you save each month? It’s not a straightforward answer! Everyone has a different opinion, and situations vary so much. The Bottom Line: When You Should Focus on Making More Money Instead of Saving.Protecting Your Savings Against Inflation. ![]()
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