Are You Neglecting Your Savings?

Last week, the unemployment rate dropped to 3.9%, the lowest it’s been since at least 2008, and probably longer… that means that just about anyone who wants a job has one and some employers either can’t fill positions or they can’t keep them filled. Wages are even beginning to rise as the economy continues to pick up speed.

But don’t let the current uptick fool you – there will be a downtick. Things will get tight again. The economy is cyclical in nature, so for every few years of a robust, growing economy, expect that there will be a few lean years, as well, especially as spending continues to increase faster than wage growth.

Are you ready for that downturn? Are you saving money for that rainy day that we all know is coming? If you’re like many Americans, we tend to assume that a booming economy will last for many years, so we put off saving money in favor of spending a little more on the things we want… we figure that we can start saving more next week or next year.

Sadly, that time often doesn’t come along, and when the bottom drops out, we find that we are not prepared for a sudden loss of income, such as job loss or a cutback in the hours that we work, or for those unexpected emergencies, like home or car repairs, and definitely not for retirement, which comes along a lot faster than you think!

So, what should you do? Well, obviously, you should save more rather than less, but the only way to actually do that is to sit down and create a plan. Tighten your budget for discretionary spending, have a little more money transferred to your retirement account each payday, or create an automatic withdrawal out of your paycheck for your emergency fund. But whatever you do, make sure that you don’t put it off until next month or next year, because the economy will change, and you must be ready.

Improve Your Financial Future

We all plan for the future… we plan our career, plan our relationships, plan for a new home, a new car, children. But have your planned your financial future? And, if you have, have you planned the steps you will take to improve your financial future? I know, you think that financial security will just automatically come with your other plans, but the reality is, unless you take the steps to make sure that your financial future is secure, those other plans may not fall into place quite as easily as you think.

So, what can you do to ensure that your financial future is as bright and shining as you envision? What improvements can you make now that will lead to the financial security that you dream about?

First and probably foremost, if you’re an adult, and you’ve completed your education, have landed your first grown up job, and maybe bought that first car or rented that first apartment, then it’s time to make sure that you’re paying all of your bills yourself. Too many young people these days depend on their parents to carry certain expenses that they should be paying for themselves, and we, as a society, have contributed to the expectation that our parents “owe” us this continued financial support. I mean, realistically, should your parents continue to pay for your car insurance? Your cell phone bill? Or, even more importantly, if you have a good job and have the opportunity to carry your own health insurance, should you stay on your parents’ insurance plan just because the federal government says you can until you turn 26? The answer is no. Your parents have worked hard all their lives for their money, and as an adult, it’s time that you cut the purse strings and support yourself with your earnings. Yes, you may have to make some sacrifices. You may not have the money to buy everything that you want, but if you’re careful and live within your means, you will find that you’re much more content knowing that you’re paying your own way. (And I guarantee that your parents will be thrilled when you do finally cut those purse strings!)

Secondly, when you do get a job with the benefits that are so important to your future, make sure that you take advantage of contributing to whatever retirement plan is available, regardless of where you are working. So what if you are starting out in a job that you only plan to keep a short while? Sometimes, plans change and we end up staying with a company far longer than we thought we would. If you change jobs later on, you can always roll over any savings that you’ve accumulated into the new plan or into a separate plan. Retirement may seem like a long way off at first, but believe me, life happens and one day you’ll be glad that you saved as much as you did when you had the chance.

Third, start working on your credit. It can take years to establish good or even excellent credit, and if your credit score is low or non-existent, it can affect your ability to get a better job, to buy your first brand new car, or even get the mortgage you need to buy your first home when the time comes. So pay attention now and make things easier on yourself later.

Finally, set aside an emergency fund, and keep adding to it every time you get paid. Let’s face it, we all need to have a cushion to fall back on when times get tough. It may be something as small as a new set of tires, or as big as having to support yourself for a few months in the event that you lose your job, but whatever the reason, you need to have a savings account to cover those little (or big) emergencies that crop up!

Although these might seem like no-brainers to some, you would be amazed at the number of people who haven’t even started planning for the future financially. Do yourself a favor. Start now. Today. Trust me, tomorrow will be here before you know it!