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Posted on Jul 13, 2016 | 0 comments

Saving for the future: Shining some light on the basics.


Four pieces of advice to help you save for your big goals.


According to two 2015 surveys – one by Google Consumer SurveyThis link opens a third-party website not affiliated with STCU. and one by Bankrate.comThis link opens a third-party website not affiliated with STCU. – 62 percent of Americans do not have enough savings to handle an unexpected emergency, much less any long-term plans. Thirty-one percent of those between 35 and 54 reported savings account balances of zero.

So what’s stopping so many people? For some, building healthy savings can feel far-away and a little intimidating. When it comes to savings for any kind of goal, big or small, knowing the basics can help give you a place to get started.

1. Create your safety net.

Time and time again, it’s not the big expenses that stop people from setting aside money, but the unexpected ones. Before you start a savings strategy, you should have a plan for emergencies. This means building a healthy emergency fund and understanding your insurance.

Emergency funds are generally easily accessible savings accounts. Some experts suggest having up to six full months of living expenses in your emergency savings, though even a much smaller amount is a good place to begin. These are the funds you tap when facing a truly unexpected, immediate expense. That may be a big car repair, a cracked tooth, or a lost job. Having this savings available helps ensure that you don’t need to tap into your investments or other savings accounts early.

Even the healthiest emergency fund, however, can’t cover everything. Make sure you fully understand your health and renter’s or homeowner’s insurance policies. These policies are your first line of defense for some of life’s most expensive emergencies. If you need help understanding the deductible, what’s covered, or how to file a claim, ask an insurance company representative.

2. Start early, no matter how small.

It can be tempting to put off just about any kind of investing until “later.” In the long run, however, starting early can help you immensely. Compounding returns mean small investments typically offer better returns over the long run than a single, late, large investment. Even if it’s only a few dollars a week, start putting money away as early as you can.

3. Take the full match.

Many employers will match your contributions into a retirement plan up to a certain percentage or dollar amount. These programs essentially pay you to save money, so take advantage of the full amount from the beginning of your employment ― otherwise, you’re leaving free money on the table.

If you are changing jobs, then know your rollover options for the retirement plan at your old employer.

4. Be ready for the long haul.

Saving for your goals is not a short-term proposition. In fact, investing wisely may mean your investments don’t grow much in the first few years. In the short term, your plan may mean that savings grow slowly – and that is ok. Many big goals don’t happen quickly! You should be emotionally and financially prepared for the long haul. No matter what you are saving for, a strategy that is built around achieving your goals and begins early sets you up for success.

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