Judging from the way things are going these days, more and more people are living month to month on their salaries without a safety net. Instead of becoming smarter about our finances we seem to be going backwards. The average family has 7-8 thousand dollars in credit card debt and half that amount in savings, if that. We own our houses but we owe more than we own and we didn’t make smart decision when it came to our mortgages, and now we are stuck up a tree without a ladder, as evidenced by the mortgage crisis of the day. Some families are two paychecks away from bankruptcy, a sad state for the citizens of one of the richest nations on earth. But there is always hope and education is the answer.
As a society we have gotten away from the “Savings Culture”. A couple of generations ago there used to be a Savings Culture, but somehow the message got lost in the changing of the guard. It was commonplace to have a Savings Accounts , and to put away something for a rainy day. We don’t do that anymore, we live for the moment and the future be dammed. Living in the moment doesn’t mean that we cannot think and plan for the future. It’s time to make a change and to start educating ourselves and our children about financial planning.
It’s not difficult it just takes some commitment, discipline and control.
- The commitment to follow a financial plan
- The discipline to put that plan into action
- The control not to stray from the plan
One of the first things to consider when building a financial plan is to build a cash reserve big enough to advert an unforeseen emergency such as a layoff or major illness. Nowadays banks make it so easy to put money away with so many choices like Savings Accounts or Traditional CD’s, Online Savings, Statement Savings, Traditional CD, Online CD, Liquid CD, there is no excuse not to save.
- Pay yourself first, put 10% away no matter what, if you wait for the end of the day to save, the money won’t be there.
Another thing to consider when making out the Financial plan is to save for retirement, don’t wait for the last minute to think about saving for retirement if you want to retire at a reasonable time. Most people don’t realize that Social Security was never meant to be the sole provider of retirement income it was always meant to be a supplement to personal retirement income. Use whatever vehicles for retirement that are available to you, if you company offers a 401k, take full advantage of it, this is the best thing since the Internet. Check out WaMu they offer some interesting vehicles for retirement.
- Save as much as you can and save early, time is your friend.
Probably the most important point to consider is your debt. This is where the control comes in. Learn to live within your means, leave those credit cards at home. Better yet, cut them up. Save one credit card for emergencies and pay them down.
- If there is something you want, make a plan, save for it
Instant gratification is our enemy, we want everything now. But we have forgotten that working for something we want makes us appreciate it all the more. Teach your children to do the same, change the Culture of Debt back to a Savings Culture.
http://www.wamu.com/personal/savings_account/default.asp
