Your most recommended way of Saving money for House/Retirement.

posted 3 years ago in Money
Post # 2
Member
42469 posts
Honey Beekeeper
  • Wedding: November 1999

EllasGrace20:  My best tip is to have savings deducted automatically from your bank account every month. Pay yourself first. Meet regularly with a financial planner to decide how to invest those savings. Maximize your contributions to whatever opportunities you have for tax sheltered savings in the country where you live. In Canada that is TFSA’s and RRSP’s.

No one wants to live in poverty when they retire, but too many people fail to plan and act on that plan.

Post # 3
Member
133 posts
Blushing bee
  • Wedding: July 2012

I am a huge geek and proud of it. I have our entire years worth of money in a spread sheet. I have each direct deposit we will get from work along with each bill that gets paid out of our checking account. Then I have a daily sum column so on any given day I know the balance of our account. I always update it as things change but this helps me budget our life. I use this to decide if we can go on a trip or do a renovation to our house and to see how much we will have saved by the end of the year. That is my day to day saving method and it has worked for us to help us from over extending ourselves.

As for retirement saving I use my 401k from work as my primary saving for retriement method I put into as much as I can without getting worried about our day to day budget. My husband also uses his but he gets a pension with his job  (we are very lucky!) so he does not put as much into his. We met with a finacial planner to talk about a roth IRA. I honeslty cant remember all the details because we were saving to buy a house and needed our saving accessible. Now that we have bought the house we should probably look into it again, thanks for the reminder!

So if you are saving for a house try and break out your budget and see if there are things you can give up so you can put more into savings to get to your house goal sooner. If you are thinking retirement 401k and IRA are probably more important. 

Post # 4
Member
3044 posts
Sugar bee
  • Wedding: September 2016

Separate savings account I transfer money into as soon as I get my cheque. 

Post # 5
Member
2891 posts
Sugar bee
  • Wedding: May 2015

EllasGrace20: Max both the traditional and Roth IRA if you can. I don’t like 401(k)s unless they have matching because you don’t get liquidity.

Set up a brokerage account + get into high yield ETFs b/c you’ll have liquidity (i.e. can cash out without pentalty if something happens) and get a great return (my return was 18% last year because the market did well).

Find a smart financial advisor and accountant.  

Post # 6
Member
866 posts
Busy bee
  • Wedding: September 2015

Honestly your best bet is to find a local CFP (certified financial planner) in your area and go in and make a plan. If they aren’t a CFP but call them self financial advisors they will usually try to sell you on specific items the yet commission for, not actually have your best interest at heart.  A CFP will help you tailor a specific plan for you and your FI’s lifestyle. I hate to say it but the Bee isn’t the best place to ask for financial info because it’s different for everyone and certain things are obviously different in each state. It also dependS on What you do and what your employer contributes (offers). It’s great that you are starting so young! Good luck!

Post # 7
Member
606 posts
Busy bee
  • Wedding: November 2013

I recommend a 401k if your company does a match.  If your employer does match your contributions, max it out!  Don’t give up free money!

Outside of that, I’m looking for more ideas too!  I’m interested to hear what the other Bees have to say.

Post # 8
Member
2214 posts
Buzzing bee
  • Wedding: August 2015

Through my company I have somthing similar to a 401K that matches 6% of my contributions, and I also have a Roth IRA that is managed and invested by a financial advisor. I would recommend getting a financial advisor to invest for you if you are naiive to managing money (which I am also).

Post # 9
Member
6073 posts
Bee Keeper
  • Wedding: August 2012

EllasGrace20:  I too come from a family that had money problems (my dad was a gambling addict) but DO NOT let that dictate your future!!!!  Don’t even use it as an excuse.  You are not them nor are you making choices they would make.  Family does not have to be our only source of money habits.  This can all be self learned.  I am an example.  So kudos for you for wanting to know more!

 

Does either of your employers offer a matching program with a 401k?  If so, that is the first step – sign up for the 401k and contrubute whatever the company does to get the matching program started.  That is essentially free money.

 

Second, open Roth IRAs for each of you if you can (use your employer if they offer it, or use Fidelity or Vanguard – they have low maitenance fees).  $5500 is the yearly max for each Roth, so you can put in $11000 total for the both of you.  But even if you can only put away $100/month/Roth, that is better than nothing.  Roths are usually suggested over Traditional IRA (which you use your pre-taxed money for contributionts), but then you pay taxes on them in the future.  They say you don’t really know your tax rate in the future, or even what the USA will do with the tax rate system, so just go with the Roth (according to Suze Orman).

 

Roth contributions are made AFTER you’ve paid your taxes.  So when you go to use it in retirement (or after 59.5, if you retire earlier than 65!) you will pay no taxes on the withdrawals and it has years to build!  Roths also allow you to take out ANY of your own contributions (even right now) without fees or penalties or taxes.  Basically what you put in ($5500/year) you can take out at any point for free.  Please do not do this though unless it’s a dire dire dire emergency because you cannot replace the money once taken out.  Think of it as an extreme emergency fund if you will (only for the most diligent).

 

If your work offers a High Deductible Health Plan HDHP, consider this health insurance option because it comes with a Health Savings Acccount or HSA.  HSA also have a yearly limit of $3300 for individual HSA.  Money goes into this befor eyou pay your taxes.  You can use the HSA for any medical related epxenses prior to the age 65 without any fees and you can take the money out fr medical stuff for free.  We basically max two HSA right now, but we do not touch them for medical expenses.  Instead, this is going to be our health insurance expenses when we retire early.

 

Then after age 65, you can use your HSA for ANYTHING!  If it’s nonmedical, you are subject to income taxes however, if it’s medical there are no fees at all.  That’s a triple tax deffered account.

Post # 10
Member
5697 posts
Bee Keeper
  • Wedding: August 2012

Yes you absolutely need a 401K or IRA, something for retirement, and whichever your company matches if any. If they DO a match, you should be maxing it out. And you shoudl be starting this like, yesterday.

Second, as PP’s have said the easiest way to set aside money is to have it auto deducted from your paycheck and deposited in a bank acct separate from your checking acct. 

I also thought this website was SUPER cool, although I have never set anything up on it. 

https://www.smartypig.com/ 

Post # 11
Member
6073 posts
Bee Keeper
  • Wedding: August 2012

I also wanted to add that if you keep track of your monthly spending – basically what doe sit cost you to live each month, then you know how much play money you have or how much you can start saving.  To me, it would be very hard to figure what your savings plan is if you don’t already know your spending habits.

I use a 15 year old spreadsheet that I’ve been tweaking over the years. 

Post # 12
Member
6073 posts
Bee Keeper
  • Wedding: August 2012

compound interest

 

  • This reply was modified 2 years, 6 months ago by  sienna76.
  • This reply was modified 2 years, 6 months ago by  sienna76.
Post # 13
Member
6073 posts
Bee Keeper
  • Wedding: August 2012

Every 25-Year-Old In America Should See This Chart ^^^^^^^<br /><br /> <br />Susan, who invests $5,000 per year only from ages 25 to 35 (10 years)<br />Bill, who also invests $5,000 per year, but from ages 35 to 65 (30 years)<br />And Chris, who also invests $5,000 per year, but from ages 25 to 65 (40 years)<br /><br /><br />Make note of Bill’s different and how much “waiting 10 years” costs him in the end.

Post # 14
Member
6073 posts
Bee Keeper
  • Wedding: August 2012

Susan – who only invested for 10 YEARS but started earlier, has MORE MONEY than Bill who saved for 3 TIMES as long and 3 TIMES as much!

 

That just blows my mind!

 

Take home message: Start NOW whatever you can do.

  • This reply was modified 2 years, 6 months ago by  sienna76.
Post # 15
Member
6073 posts
Bee Keeper
  • Wedding: August 2012

n/a

  • This reply was modified 2 years, 6 months ago by  sienna76.
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