What You Should Be Saving For

The Unexpected

Anything can happen! Life is full of unexpected curve balls and the only thing you can do is make sure you're not caught with your pants down. Surprise car break downs, lay-offs and injuries are stressful enough and for a lot of us there is the added strain of not being financially prepared to deal with it. Do you really want to be laying in a hospital bed worrying about the debt you're going to be in over the bill or find yourself jobless without enough money in your account to get you to the end of next week? Of course not! And you can avoid finding yourself in that situation if you build an emergency fund. A "reserve" of 3-6 months living expenses is commonly recommended and more than that is even better! 3 months of expenses can become a huge number but it doesn't have to be overnight but be disciplined and put as much as you can spare away over time and slowly but surely it'll begin to pile up.

Weddings, college, new car and first home purchases are just a few examples of some pretty expensive milestones. Why drown in debt to pay for special events when you can prepare. I've met too many people who are still paying the bills for their wedding after the divorce! If it means that much to you to incur huge amounts of debt it should mean that much to you to save up as much as possible ahead of time. Of course I'm not suggesting putting off buying a home until you have every last dollar in cash but do find a middle ground. Remember, it all has to be paid sooner or later...with interest! The less you finance, the better off you are.

It may seem a long way off but it creeps up on you and it's better to save a slow and steady amount every year starting now that to be scrounging for money to live off of later. Social security will be non-existent before most people retire and it was never anything to count on count either way. At 20 years old you would only have to save $33 a month at 12% interest to have a million by age 67, however for a 30 year old to get the same results they would have to save $109 at the same interest rate. You don't need a calculator to figure out which is the smarter move.