Money Matters: Savings
08/10/2012 - 12:24 ||
Saving. You’ve always heard it’s the right thing to do, but every month you somehow seem to spend your way through your paycheck. If it isn’t new clothes for your kids, then it’s those pesky car payments or paying off that weekend getaway you took. Simply put, you’re probably not going to save unless you make a proactive effort to do so. And that means having a strategy.
If you’re committed to saving, it’s a must to put aside a fixed amount of money every month. Have it automatically withdrawn from your checking account so there’s no temptation to spend it. Don’t get overwhelmed. You can start off by cutting back on one thing you usually buy, and putting away a small amount of money, each time. Make it doable. The savings will add up in time.
Once you have some money set aside, you might think it’s best to put it away in a savings account. In today’s market, that couldn’t be further from the truth. Interest rates are dismally low and trumped by inflation, meaning the money you put in a savings account will actually lose value over time. You need to park your money somewhere where it will grow in value.
How do you do that? Financial advisors are often the best source, but many people can’t afford them as they require a large starting balance and often charge hefty fees. So perhaps simpler strategies are better suited to begin:
- Spend time developing investing skills:
- Buy a couple books and read the newspaper. Some good sources are The 9 Steps To Financial Freedom by Suze Orman or One Up On Wall Street by Peter Lynch. As for newspapers, start off with the business section of your local paper and work your way up to the Financial Times and Barron’s.
- Watch a financial television show - just a few minutes a day watching Bloomberg Television or CNBC and you will pick up some great knowledge.
- Listen in on investing webinars or attend in-person educational events put on by organizations such as the National Association of Investors Corporation (http://www.betterinvesting.org).
- Join or start an investment club. Talk to your local chamber of commerce, bank or the business department of a local university to see if they know of investment clubs in your area. Or use online resources such as Bivio (www.bivio.com).
- Once you have a better handle on how to invest, you can open an account with what’s called a discount broker. This is a do-it-yourself strategy where you don’t get much advice, and you can buy and sell securities on your own. It’s important to know what you’re doing, so only do this if you already know a thing or two about investing or can spend some time developing the skill.
- If you can’t spend the time to learn how to be an investor, you can still use an account to invest in a mutual fund. The return will likely be lower, but it’ll be much easier and a great way to get going.
Remember, it’s about getting started, not getting overwhelmed. So start out slowly if you need to – you’ll be surprised how much you learn and how the savings begin to add up.
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