Ask Adrienne: Money 3 – Saving

This post wraps up the money trilogy. Since it was so well received, I will definitely write more on this topic in the future.

Since I started out by defining money in relationship to value followed by information on debt (using more value then you provide), it only makes sense that I end with the my favorite part: saving.

Saving is the opposite of debt because you are providing more value then you are using. Saving is by far the most fun because usually when you are saving, you aren’t worried about making your mortgage, rent, car payment, etc.

Lets talk about some of the most frequent questions I get asked before we get into heavier stuff tn later posts.

What is the benefit to saving?

 

  • Having money when rough times hit such as losing your job, change in your personal business, or unexpected medical expenses.
  • Retirement
  • Travel
  • Being able to help other people who need it
  • Retiring early
  • Being able to afford items of larger value (house, boat, cabin)
  • Better investment opportunities
  • Having money for future high expenses such as kids going to college.

Do I need to worry retirement? I will have social security.

Yes. Social security is not meant to be a total income replacement. It is a supplement. The average paid out per month is 1000 dollars. Is this enough for you to retire the way you want?

 

How much do I need to retire?

That is a loaded question. If you retire at 65, how long do you plan to live? Today people are living into their 100s. If you retire at 65 that means you need 35 years worth of income to live on if you live to be a 100. The best I can say here is have enough money that you only live off the interest. This way you can live as long as you can with out money being an issue. This means if you want 2000$ a month, you need around 2.2 million getting around 10 percent return.

 

I am too young too deal with that now, or I am too old too start now.

No such thing.

 

What are the top 5 things you recommend so I can retire with out a financial worries?

  1. Have a place to live that is free or close to it. This means owing where you live out right.

  2. Get in shape now and stay in it. Walk everyday. This will save you a ton of money later down the road in health care.

  3. Save enough money so that you live off interest alone.

  4. If you can stomach it, be a contentious high risk investor. I will write more on this in future posts.

  5. Don’t “barrow” from your savings unless absolutely necessary. This means don’t take a vacation with the money you are saving.

 

For those interested, here are some of my favorite savings calculators.

 

This one is simple but it allows you too drag a bar to change a criterion just a little and see the difference that makes

 

I like this one because it works backwards. You tell it how much you want to have and it tells you what to do to accomplish that. It also has an amortization option. I love amortization calculators.

 

This is a good one for working with taxable and nontaxable accounts.

 

Adrienne :)

 

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