Building Your Savings

Importance of Saving

At times it may seem like saving is impossible, but it’s not and it’s incredibly important. Ideally savings should be at least 10% of your annual income. You need to build up a cushion of savings should the unexpected occur.

What would you do if your car broke down and you needed to make a few thousand dollars in repairs? You’re not going to want to put this on your credit card – in the end you would just owe even more. With a nice savings cushion this wouldn’t even be a problem.

Easy Ways to Save

• Automatic Transfers: Ask your financial institution to transfer a pre-determined amount of money on the same day each month into your savings account.
• Payroll Deductions: Like automatic transfers, your financial institution will automatically place a specific amount of money into a savings account from each paycheck that comes in. (This is also helpful for making loan payments!)
• The old stand-by: Keeping your change in a jar. This one is self-explanatory. Don’t forget each little bit helps!

Saving for Retirement

Retirement may seem like a long way off, but it's important to start saving as soon as possible. When you get a full time job, your company will probably ask you how much you'd like to contribute to a 401(k). As a benefit, many companies will match your contribution up to a certain percentage of your salary; in other words, your company will give you extra money. Take advantage of this!

Retirement savings accounts offer tax advantages. The money that you contribute is non-taxable income – taxes are calculated according to the money remaining after you make retirement contributions. In addition, these tax-deferred savings accounts will allow your money to grow much quicker than your taxed investments. The only time that this money will be taxed is when you withdrawal it.