Preparing for the future is more important than ever as you can no longer rely on the money you will receive from Social Security when you turn 65. Most people put the future in the back of their mind and live simply for today. If they don’t have the money to purchase some coveted item, they simply put it on their credit card without thought to the consequences.
A savings plan in the not too distant past was something most families were proud to have and often budgeted money each week to deposit into their accounts. Nowadays, with prices rising for just about every expense for living, savings is not a high priority, which is really a shame.
Why Are Savings Important?
As we mentioned, Social Security cannot be depended upon to care for us in our golden years. In fact, baby boomers and the generation that followed may see the last of this benefit of retirement. You will still need to eat, have a roof over your head and afford medical care when you retire, and you will have to consider how you are going to pay for these necessities of life.
Savings are not only important for the distant future, but the future that is just around the corner as well. Case in point: if you live from paycheck to paycheck and something catastrophic such as a medical emergency or getting laid off happens, what will you have to fall back on to pay your expenses until you are able to return to work?
How To Start Saving
Most people are under the assumption that investing in stocks and bonds is the way to prepare for their retirement years. That may be so, but before you can invest in the market, you need to have a decent sum of money that will pay you the dividends for which you are looking.
A great innovation in the corporate world was the utilization of a 401K plan. This is a plan where your employer deposits a certain percentage of your salary from each paycheck. You can often access this money if you need it in an emergency, but most people tend to leave the money in the plan so they will have a nice nest egg for which to plan their retirement.
If you don’t have access to a 401K plan, you may think of putting money in an IRA account. You will earn interest on the money and you will not be able to take it out just because you want to buy a new toy. The most important aspect of an IRA account is that when it matures, you should immediately roll it over for another specified period of time instead of taking the money and spending it.
Leave Room In Your Budget For Savings
Another way you can ensure that you have a financial cushion is to budget a specific amount each paycheck that is to go into a conventional savings account. Pay your savings account just as you would any other bill such as utilities, car insurance and credit card payments. Making savings a priority will see you through some tough times and allow you to slumber peacefully, secure in the knowledge that you are preparing for your future when you no longer work a full time job.