Look Ahead: 3 Tips to Live Today and Save For Your Future
Is concern about paying your monthly bills getting in the way of your retirement plans? If it is you are not alone. According to a recent article in CNN’s online magazine, Money, half of middle-class Americans reported that their most pressing financial concern is paying their monthly bills, up from 37% a year ago. Saving for retirement is second on the list. When people are grappling with their day-to-day finances, planning for retirement can seem like a great idea, but one that must be put off for tomorrow. If you find yourself in this group, the steps below may help you get on the path to making retirement savings a reality.
Spend less than you earn
The idea budgeting can make you feel constricted at best and absolutely deprived at worst. Truth is though, a budget does not have to be either constricting or depriving. Instead of thinking about a budget as box that you can’t go outside of, think of it as a powerful tool you use to put you in control of where your money is going each month. A complete spending plan will include three areas of spending: fixed expenses like cable, mortgage/rent, utilities, and car and loan payments; variable expenses like gas, groceries, entertainment, and clothing; and periodic expenses like car repair, holidays, gifts, and travel. Planning for periodic expenses is frequently neglected in spending plans, which leads us to our next tip: building savings.
Fill up your savings buckets
There are few things that can lead to large amounts of credit card debt more than not planning for periodic expenses. When was the last time you were able to pay for a car repair with the money in your checking account? Or all of your holiday gifts with cash? Did that last vacation come out of your travel savings account or go on a credit card? Planning ahead for these periodic expenses not only creates peace of mind, but will save you money since you won’t have to pay interest like you would with a credit card. And the recent recession has shown all of us that an emergency savings of 3-6 months of living expenses is essential. No spending plan is complete without these three savings buckets: emergency, periodic expenses, and retirement.
Pay down debt
Using a spending plan and building savings are the keys to avoiding debt, but if you haven’t been doing either than you may have found yourself struggling with some debts. Credit card debt can be disastrous not only for reaching savings goals, but for retirement as well. Recently the National Foundation for Credit Counseling published an article about a senior couple in their late 50's and 60's who paid off six figures of credit card debt so they could retire! If you are struggling with making or sticking to a spending plan, building savings, or paying down debt, seek guidance and support from a Certified Financial Counselor. LSS Financial Counseling has a team of Certified Financial Counselors that can work with you to create a plan for a debt free future! This is the perfect time of year to look ahead and picture yourself debt free!
Written by Shannon Doyle, Certified Financial Counselor with LSS