Money / Financial Planning
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It can be intimidating to figure out how to save toward all of your financial goals at the same time, especially when you’re trying to pay your regular bills, too. Your paychecks can only stretch so far, but if you delay saving for your long-term goals while you focus on the short term, you’ll miss out on valuable tax breaks and other benefits that can make it easier to build your savings for the future. The longer you wait to start saving for retirement, the more money you’ll have to set aside to reach your goals.
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Meanwhile, you may also want to buy a house in the next few years, and realize the importance of having an emergency fund so unexpected expenses don’t derail your financial plans. The key is to juggle saving for all of these goals at the same time. Here’s how to make it work.
Start With Manageable Goals and Special Benefits
Saving for three major funds simultaneously can be daunting, but you can begin by setting aside a small amount toward each one and increasing your savings through time.
Even though you may not retire for many years, don’t miss the opportunity to start building your savings now and taking advantage of tax breaks and help from your employer — which can stretch your savings even more. You may start out with the goal to save enough in your 401(k) to get the full match from your employer — that’s free money. “Retirement savings is the top priority and the easiest,” said Kathryn Peyton, a certified financial planner in Sonoma County, Calif. “That’s usually easy to do because it comes out of your paycheck before you can spend it.”
Then increase your contributions as you get raises and bonuses. “Many 401(k) plans have the option for you to automatically increase your contribution on an annual basis, so as your income increases and you become more comfortable saving, you will automatically be putting more away for retirement,” said Gerald Grant III, a certified financial planner and Equitable advisor in Washington, D.C.
Learn: 27 Best Strategies To Get the Most Out of Your 401(k)
You can use a similar strategy with your other financial goals. It’s important to have an emergency fund so you can avoid high-interest debt or raiding your retirement accounts if you have unexpected expenses. Financial advisors often recommend keeping three to six months of expenses in an emergency fund. You don’t have to …….
Source: https://www.gobankingrates.com/money/financial-planning/saving-tips-emergency-fund-retirement-home/
