Everyone has different goals, hopes, dreams, priorities, and obligations, but there are some things most of us have in common that we should be saving for:
Paying Off Debt
Before saving for anything, the first thing you should do with your money is to pay off any debt you have. If you don’t, your debt will follow you for the rest of your life and will be a financial burden that can lead to stress, health problems, loss of assets, bankruptcy, and poverty. Once you have are debt free you can start concentrating on the future by putting away money that will lead to a better life, one that you’ll be able to enjoy with a clear conscience and a clean slate.
You never know when medical emergencies may arise, so it’s really good to be prepared. Even if you do have insurance, you still might have to fork out a few thousand dollars for medical expenses, depending on the procedure and how much your plan covers. If you don’t have insurance, it’s essential that you start saving as much as you can as soon as you can especially if you have children as kids get sick more often than adults and need more medical attention than their parents do. You want to be able to provide the best care possible — and pay for it — so they can stay healthy and happy.
It can happen to anyone; you could get laid off and even if you have savings to rely on it’s a frightening prospect. So, it’s better to be safe than sorry, and essential to prepare for a period of unemployment with a fallback fund in the bank to make the search for a new job a little less stressful.
While saving for retirement seems like a no brainer, you might be surprised at the number of people who put this off until it’s too late. Start a fund in the present for your future retirement — whether it’s a 401(k) through your employer or dedicated savings on your own if you’re self-employed. It’s also convenient to have in case you need to take out loans against settlements when you’re in a tricky situation. Everyone deserves to live out their final days in financial security, but you’re also in control of that outcome — and there’s no reason you shouldn’t be thinking ahead no matter how young you are.
Children’s College Funds
Kids grow up before you know it so you should start a college fund for your child as soon as they come into the world, or even before. It doesn’t really matter how much you contribute, just put in whatever you can afford. It just matters that you’re contributing so that you can offset the incredible cost of college when your children are ready to go.
While many parents have to decide between saving for their children’s college or their retirements, most financial advisors would recommend to out saving for retirement saving comes first because there are more college funding options available than there are for retirement. However, for both, the key message is the same, save early and save often.