What is Your Personalized Savings Plan?
October 8, 2013
Our retirement plan administator sent us a list of steps to follow to help us save our money. They point out that contributing to our 401(k) should be just one part of a more comprehensive savings plan.
Here are those steps that can also help you save some money!
4 Must-Do Savings Steps
According to them, the first four steps below are a “must-do” and should be done in the order listed.
1. Contribute to employer-sponsored retirement plans at least to the maximum company match. This ensures you’re not leaving free money on the table each year.
2. Pay off non-deductible, high-interest-rate debt, like credit cards. Interest paid on these accounts can easily equal any interest gained in a savings plan.
3. Create and maintain an emergency fund equal to three months of living expenses. In uncertain economic times, almost anything can happen. Having an emergency reserve is critical for those who experience a reduction to their income.
4. Contribute at least to the maximum allowed to tax-advantaged retirement or health savings accounts. This helps you save more for retirement or healthcare expenses while reducing your tax liability each year.
4 More Savings Tasks
Then they list the following four things to be considered based on your household needs. These are to be done in the order that makes the most sense for your family:
5. Establish and contribute to a child’s education savings account. Paying for tuition while the child is young is easier than with loans later. An education savings fund allows you to spread out the costs over a longer period of time while earning interest, enjoying a tax savings, or both.
6. Save for a down payment on a home.
7. Pay down deductible, high-rate debt. Debt payments are funds you could be investing or saving for other purposes or cash purposes.
8. Keep investing. Disciplined, regular investing is the key to ensuring you have enough funds so you can retire. This can easily be done through payroll deduction or automatic withdrawal from salary deposits.
Which do you think is the most important of their last four steps? Which of them are you working on for your family? Leave a comment!
This article was originally published on September 18, 2010.
All posts by Ben Edwards