Lately, I’ve been reflecting upon my money savings.
Another sharp turn in life’s highway. Cruising along a fairly straight thoroughfare for years. Now we are finding ourselves climbing the road through the Continental Divide. Blind corners, steep mountains and unforeseen obstacles.
Money Savings and Pay Yourself First
I never used to listen to the number one advice of financial planners. How does that go again? Oh yeah, “pay yourself first.” Putting 10% of your take home pay into savings sounds like a lot, but even starting with 5% or less is okay, I have found. The biggest thing is to just start.
The easiest way to start paying yourself first is to have an automatic deposit set up. The day your pay check is deposited, your financial institution can automatically take your set amount of money and deposit it into your savings account. From there, all you have to do is watch it grow! Watch it grow and sleep better knowing you have some money set aside for whatever life throws at you.
Use Short Term Savings As An Emergency Fund
So, a few years ago we decided to put some money away into something other than registered safe retirement funds. Now I do know the purpose for this was for later in life, but alas, emergencies come and go and we can thank ourselves for having those funds available to see us through some tough times.
Our emergency fund is going to help us navigate this tough, rough and windy road from one side of the Rockies to the other. Health issues are tough enough to deal with without having monetary worries on top of them.
Build Long Term Savings For Your Retirement
Having that emergency fund is helping to make sure that we don’t have to touch our retirement savings. After all, we’re told just how important it is to “save tax-free”. If your employer offers a retirement savings plan, make sure you are contributing the maximum allowed. Try to put in whatever you can afford, making sure that you are contributing enough to be eligible for whatever your employer’s matching contribution is.
Have you done a recent check of your financial picture? Every couple of years, we should take a look at our entire portfolio, including insurance, and ensure we are still on course.
How much do we need to retire? My husband asked me that question about a week ago, not the first time, I should add. Well, at 49 years old, I guess that is a fair question for him to ask. And, one we should be asking our financial advisor. He would cringe at the question, because we should already know the answer and be well on our way to having accumulating that number.
Advisors will tell you that your retirement total depends on how much money you anticipate you will need to live on annually. If your lifestyle is such that you need $100,000 per year to live, then obviously, the amount of money you’ll need in retirement is far greater than if you were living on an annual income of $50,000. We always say that once the kids are out of the house, we will need far less money to live, but I somehow doubt that.
What do you want to be able to do in your retirement? Travel, help your kids buy a home, finish university? With all that time on your hands, will you take up an expensive sport or hobby you never had time for when you were working? Do you expect to stay in your present home? Is it paid for? Do you aspire to have a cabin/condo in a different area? So many things to consider.
Do You Have A Financial Map?
Our financial advisor asked us those questions ten years ago: at that time we had a 4 and 1 year old while paying for child support on two older children. Since then, our financial situation has changed considerably. We’re no longer paying out child support, with those older kids now in university and living on their own. The 4 and 1 year old are teenagers themselves involved in every imaginable sport and activity. One set of parents has lost their home to a fire and the others are aging and needing more physical help every year. Oh yes, and I almost forgot — my new health issues that will make me unable to work for the better part of a year. Yep, time to have another look at the financial plan.
Have we lost the map or just need to pull into a rest stop? All is good, taking a break thank you, and will be back on the road to retirement asap.