No matter what value based financial program you look at, almost all promote give as the first principle and then save is the second. This is probably the hardest of (what I have coined) The 3 Financial Keys to really grasp — not to mention, the hardest key to teach to children!
In order to be balanced we have to save wisely! Here are some different ways you can save to help build your own financial strategy.
- Save for a rainy day. Create an Emergency Fund. This helps keep your “cousin Murphy” (aka Murphy’s Law) at bay. Unexpected things are bound to happen!
- Save for big purchases. Sinking Fund for homes, children, adoptions, cars – no you don’t have to have a car payment to have a nice car! – etc.
- Save for known items. Vacation Club Savings, Christmas Club Savings, Health Savings Accounts, etc.
- Save for retirement. You can’t take a loan for retirement! Create a goal to get up to 10-15% of your overall income into Retirement savings. You many need more or less…Having a personalized plan is key!
- Save for college/education. No, this isn’t last on the priority list but it should come after your Retirement is on track.
NOTE WORTHY According to the US Department of Economic Analysis, personal saving in August 2014 decreased compared to July 2014 by over $25 billion. As a percentage of disposable income US households saved around 4.7% compared to 5.1% the prior 3 months.