THE WHY
With layoffs, economic downturns and upswings, and unexpected expenses, I’m sure you’ve already noticed life is an uncertain thing! For that reason—and also other happy ones like saving up for a house or first child—you’ll want to polish up your savings skills and start thinking about a strategy.

It’s always good to have at least one to two months salary in savings in case of layoff or emergency. This can really take the stress off if you run a little short one month and need to take a brief loan from this fund—also there’s 0% interest this way vs. borrowing from a bank, your credit card, or a cash advance establishment.

Another reason to save is to build up a nest egg for retirement. Even starting small as soon as you can is a smart idea since the money will have more years to accumulate interest if you start early. Begin by checking into the 401k plan your employer may offer since it will usually match a percentage of what you put in.

WHO CAN HELP
A financial planner (CFP) can give you advice on how you should save your emergency fund, build up a house down payment, and/or add investments to your retirement strategy—which will earn more interest than simply stuffing money into a savings account. And I don’t mean playing the stock market, although some folks do that.

To find a trusted CFP, ask your social network and your parents. Then go into the meeting with your goals and discretionary income in hand so they can recommend investments that fit your goals and level of risk tolerance. Non “fee only” CFP’s will not charge to work with you and tend your investments since they make a small percentage of the interest generated. Each investment should send you regular statements so you can see how it is performing.

Always tend toward investments that are tax-deferred. This means the money is not taxed on dividend, interest, and capital gains income until you begin to withdraw the funds when you retire. This way your income grows tax deferred.

ROBOADVISORS?
If you’re an “early adopter” of technology, there’s a new field of “roboadvisors.” The thinking here is that if you’re already using technology to find a date or restaurant, why not use it to invest? The idea is that managing money shouldn’t have to be more expensive, exclusive, or time consuming than grabbing some coffee at Starbucks.

These roboadvisers have lower minimums than a big firm like Schwab and, after gathering info from you and drawing on its algorithm, will output custom investment suggestions without any human interaction. Wealthfront, AssetBuilder, Betterment, and SigFig are examples. (Source: Jennifer Barrett, “Know & Tell,” Details, (Nov. 2014): 48.)

So whatever your level of interest or ability to save up for retirement, your first home, etc., it’s always wise to start early thinking about savings, money management, and investment. Reduce all the stress you can, I say!

This post concludes the “Life 101 for the New Millennium” series. I hope it has been helpful and that you pass it along to friends and colleagues. There is additional information you can reference on saving and checking out prospective financial planners in one of my earlier posts.

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