I mean, you can't take it with you when you die, and I would hate to die with a ton of money in the bank. On the other hand, I like watching my accounts grow, and I like the security it provides, just having the money. You never know when you may need it. What if I lose my job, etc. What approach should I take? I'm 30, single, and don't plan on having kids. Help me be at peace with this issue.
2006-08-20 08:46:09 · 7 answers · asked by Anonymous in Business & Finance ➔ Personal Finance
Pay yourself first.
My father used to listen to a lot of self-help tapes. They had some good advice, and the best advice was to pay yourself first. You should put 10% of your income into savings. Americans are really bad at this. Most Americans are in debt to credit card companies and the like, and have very little savings. Credit Cards are the worst loan rate that you can get, some credit card companies base themselves in states that allow them to charge more interest. Another good tip I picked up is that you should save enough money so that you can live for at least 3 months if you lose your job. It may take that long to get a job and get your first paycheck, so it is a good idea. Let the account accrue interest so it will grow over time. When the account grows beyond 3 months of your salary it is a good time to check out CDs.
What you do with your savings is up to you. Recently I learned that Mutual Funds are not as good an investment as I once thought. The catch is the monthly maintenance fees (from a Yahoo article by Susie Orman). The more conservative, and lower payout is always the safest. US Bonds and Treasury Notes are a real good investment because the US Government isn't going bankrupt anytime soon. Stock Market investors say treat the stock market as if you were gambling, don’t put in any money that you can’t afford to lose.
The single best savings plan is the IRA. It was designed to be so attractive to get Americans to save more (I learned this in Tax Preparation school for H&R Block). Many companies offer a matching program where they pay you a little extra that has to go into your IRA (the company gets a tax break for doing this). The money you save in an IRA account is taken off BEFORE you pay taxes on it. When you retire you can then get that money and when you pay taxes on it then, you will be in a lower tax bracket and so pay less. In the meantime the account earns interest from a bank, which is backed by the US Government so it is a sure investment. If you have an emergency then you can withdrawal your IRA money, but you will get stuck with the taxes on it (which will be high), so only do it for a REAL emergency.
The best advice is to:
A.Save enough so that if you get fired you can live, and pay your bills, for three months while you search for another job.
B.Pay off those credit cards. You will pay less interest with ANY other loan.
C.Set up an IRA account, if you change jobs you can carry the IRA account over.
D.Start thinking about your retirement. When do you want to retire, and how much money will you need to live in the style you have grown accustomed to. Social Security, if it is still solvent, doesn't pay much (currently $735 per month) and all of it is taxable.
2006-08-20 09:16:18 · answer #1 · answered by Dan S 7 · 1⤊ 0⤋
Most financial institutions will tell you that you need your base pay x 80%. Times the number of years you plan on being in retirement. This type of savings will only pay the bills though once you are retired, for the number of years you plan on retiring. Which means if you live longer than the 74 year average, you will be in an old folks home and no kids to visit you. And if you end up with major medical expenses, then you will be there sooner.
So your savings are really geared towards what type of end of days you want to live. Personally I have kids so there is somewhere to send the money. But if I make it to the ripe old age of 90, and there is a big chunk of change in the account, I can always go out and by a vintage Rolls Royce.
Or you can buy the Mercedes 500 series now, and if problems arise, sell it later for old folks home payments. A lot of actors/musicains end up in this category ...
But if you are 30 and have any savings you need to get a hold of a broker to discuss investment options and where your money will grow the best.
2006-08-20 08:59:36 · answer #2 · answered by Danny J 1 · 0⤊ 0⤋
I would take some time to estimate your future needs and goals as well as current priorities. What amounts of money do you need to achieve these goals, and when do you need this money? For instance, maybe you have a car loan you just paid off, and you want to purchase a new car next year. Decide on a reasonable amount to save per month to use for a down payment on your new car. You are 30 now, would you like to retire before you turn 45? Then estimate what income you need to generate each year to live comfortably after age 45. Is there a way that you can amass the funds necessary to retire at 45? Spending versus savings all depends on what helps you achieve your goals, and your goals will vary at different stages of life.
2006-08-20 13:26:36 · answer #3 · answered by Freddie 3 · 0⤊ 0⤋
Spend less than you make. That is the secret to spending and saving.
As for being at peace about having money, try volunteering for a cause that you believe in. Or, give money to reputable and deserving charities.
If you don't feel like that will help you feel at peace with money, try wiping your a*s with a hundred dollar bill, and pray that the last person to touch it had clean hands.
2006-08-22 08:31:59 · answer #4 · answered by financialguru 2 · 0⤊ 0⤋
I think you need to prioritize. What do you want materialistic things, out of life? Is it a house? A new Car? Save up for those things first, not a lot but little by little. What i do, and i have spending issues that i'm in the process of controlling...now i have to really ask myself if the item is worth it, or if ima get my moneys worth. and honestly i dont worry about money it comes and goes, but when i sit back and realize ****..where did it all go..it makes me sick cuz i have nothin to ever show for it. So just make a list of things you'd want and from there save little for one of them, then buy, then move on to the next. Good luck
2006-08-20 08:54:42 · answer #5 · answered by Anonymous · 0⤊ 0⤋
You may hate to die with a ton of money in the bank but trust me you don't want to be old and nowhere near dying without enough money to live decently on.
It's better to have money and not need it than to need it and not have it.
2006-08-20 09:52:24 · answer #6 · answered by Anonymous · 0⤊ 0⤋
If you know that you're going to die (terminal illness) then spend it. Do and go everywhere that you want. Besdies that, save it. Great retirement.
2006-08-20 08:52:16 · answer #7 · answered by Like Bugs Bunny on the moon... 2 · 0⤊ 0⤋