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| Saving and investing is key to a prosperous future. Image credit: Prosperity4Kids.com |
If you are planning for a less worrisome future, you will
really be troubled at the start because you have to consider so many things. Indeed,
saving and investing are never easy, as much as it is difficult to make money.
But, hey, it’s your future that’s at stake here and you just can’t afford to resort
to your credit card when hard times hit. And, by the way, credit is the number
one enemy of any wise, budget-savvy, so as much as you can, avoid using it. Or,
better yet, get over it. Throw it and cut your credit card line. Even if you’re
not using it, you still have to pay a minimal sum for it. And just imagine
paying something for nothing. That something can be set aside for savings and
investments.
Now, you have four types of funds that you just can’t live
without. Others say five, some say six. But let’s stick to the four most
essential: emergency fund, health and health insurance fund, educational fund
and retirement fund. Saving for them is really important. They’re not just an
option. They’re you’re necessity if you don’t want to stress yourself when it’s
time to pay your child’s tuition, or an accident happens, or retirement time
comes.
Emergency fund
Emergencies count a leaky roof, a broken pipe, a flat tire,
or a trip to the emergency room. Anything that you don’t expect to happen,
treat it as an emergency. The absence of an emergency fund can ruin your
budget, raid your retirement savings, or worst, place you at the mercy of the
lender. Now, you don’t want that to happen. As much as you don’t want them
around, they happen all the time and whether you like It or not, you have to
face it. If you have started earning your paycheck, the best gift you could
ever give yourself is to open an emergency fund.
Ideally, an emergency fund should be equal to 3-6 months’
worth of income. So, if you are earning $3000 a month, it means your emergency
fund has to be around $10-$18,000. In times like this when unemployment is
always lurking around, it’s best to save for a rainy day. That amount should
keep you through until you find your next job, which will take usually 3-6
months.
Health and health insurance fund
With medical bills going higher and higher, depending on
your office- or government-sponsored health insurance alone is not enough. So,
here comes the need to open your very own health insurance policy with a
private provider. But you have to pay for this every month. Rather than deplete
your emergency fund for your monthly dues, why not set up a separate fund,
which is wholly dedicated to funding your health insurance?
Educational fund
Sending your kids to college is never easy. You have to
prepare a sizable fund for that because it’s never cheap. Tuitions here, fees
there, and, of course, you have to pay for books, clothes, dorms, and
allowances that will easily leave you financially strap if you haven’t prepared
for it. So, right before having your first-born, make it a point to talk about
your child’s future, so you don’t have to suffer the financial setbacks that
sending a child to school entails.
Retirement fund
Now, we go to the most crucial fund that you should never
live without. Your retirement fund is your lifeline comes the time when you can’t
work anymore—or, at least, don’t want to work anymore. Now is the best time to
plan about your retirement because the earlier you save and invest for it, the
more money you’ll accumulate for your future. This means you can bail yourself
out from working If you have stocked enough cash to ensure financial stability
20, 30 or even 40 years after you stop working.
Saving and investing requires hard work, dedication and
persistence. You need you keep your head on your goal. Save money as much as
you can and when you have enough on hand, put it at some dividend-paying,
interest-yielding investment instruments. In the long run, your money will compound
faster than you think it will.
Surprise!
Financial freedom is just around the corner, eventually.
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