|
 |
|
|
|
|
|
 |
| Basic Finance |
 | |
Protecting Yourself with Insurance
Health, Auto, Life, and Homeowners Once you begin to save money, you'll want to avoid having to dip into your savings to pay for unexpected expenses. Having adequate insurance will help you avoid using your savings for unexpected things such as medical expenses or expenses resulting from an accident. Review your insurance policies often to ensure that you have adequate coverage. Some of the primary types of insurance include health insurance, auto insurance, life insurance and homeowners or renter's insurance.
|
ASK THE EXPERT: Savings Tips |
 | |
|
Dear H.O.M.E. Expert,
I have a good job and make a decent salary, but after I pay my bills and handle miscellaneous expenses, I don't have any money left to save. Can you suggest some strategies to help me start saving for my emergency fund and/or retirement?
Signed,
Struggling to Save
| |
 |
Dear Struggling to Save,
Pay yourself consistently AND do it automatically. Saving automatically is easier because if you don't see the money, there’s less chance you’ll miss it or spend it. It's easy to save automatically. Simply have a certain amount from your paycheck electronically deposited into an account of your choice — anything from a savings account to a special purpose account. Here are a few ways that you can save automatically.
- Automatic Payroll Deposits — direct deposit automatically deposits your paychecks into your a checking or savings account. In most cases, you can designate a portion to go into your checking account and a portion into your savings account.
- Individual Retirement Accounts (IRAs) — an IRA is an investment account that you set up at a bank, credit union or other financial institution. If you’re under 50, you can currently invest up to $4,000 every year. If you’re 50 and over, you can invest up to $5,000 every year. After 2008, for those 49 and younger, you can invest a maximum of $5,000 each year and for those 50 and older, a maximum of $6,000. An IRA is a long-term retirement plan, and can have significant penalties if you withdraw money before 59 ½.
- Employer Sponsored Retirement Plans — a 401(k) plan is a special savings and investment account that your employer sets up through an investment company, insurance company or bank trust department. This is a long-term investment. If you decide to take the money out of this account before you turn 59 ½ without repaying it, you have to pay 10% in federal taxes, plus a penalty from the financial institution. Comparable salary deferral retirement plans include 403 (b) plans that cover employees of educational institutions, churches, public hospitals, and non-profit organizations, and 401(a) and 457 plans that cover employees of state and local governments and certain tax-exempt entities.
- College Savings Plans — every state sponsors its own 529 college saving plan where your money can grow free of federal taxes. And in many states, it’s free from state income tax too. You don’t have to get a plan in your own state, so shop around and find one that works best for you and offers the best rate.
Note: Always consult a financial advisor for more detailed information and assistance regarding retirement and saving options.
Signed,
Your H.O.M.E. Expert
|
|