HOW TO START SAVING – AND STOP WORRYING
The best way to handle the unexpected?
Plan for it.
If you're like many Americans, this might sound familiar. You know you need to save more, but something always gets in the way. A major car repair. Braces for your teenager. That credit card bill you're diligently paying down.
Here's the thing: Your situation is understandable – and not uncommon. But it's also probably causing you some stress. You may be asking some typical – but important – money questions: Will you have enough for retirement? Can you afford to send your kids to college? How would you handle a major medical emergency?
Yes, it's natural to feel uneasy. But it doesn't have to take over your life. Here are two ways to be a wise steward of your money – and maybe even lower your stress level in the process.
An emergency fund can be a powerful source of comfort. How much do you need? The common rule of thumb is three to six months' worth of expenses. Those can include the basic elements of your day-to-day needs such as:
Tip: If you don't have cash on hand now to cover three to six months, start small and work up to it. Set aside $50 per week, and you'll have $5,200 in the bank after a year. Double that weekly amount, and you'll have $10,400.
Whatever amount you contribute – the key is to make it a regular practice.
An emergency fund can be a powerful source of comfort. How much do you need? The common rule of thumb is three to six months' worth of expenses.
Saving for emergencies is only part of the equation. You'll also want to factor in larger financial events like retirement and whether you'd like to contribute to a child's college education. And just as with emergency savings, consistency is your friend. Why? You can chalk it up to something called compound interest – the addition of interest to a loan or deposit's principal sum.
As an example, let's say you decide to save for retirement in an. The money you start with is known as your principal. Over time, the principal earns interest. The more time you have for interest to accumulate, the greater your money's potential growth.
How does it work? A simple illustration can help.
For illustration only. Does not take into account any market or economic fluctuations to savings.
In this example, you nearly double your retirement savings account over the course of a 20-year period. You would have more than $46,000 in savings, and you only contributed $24,000. In other words, your money is working for you!
Setting up short- and long-term savings plans can help build a solid financial future. Not sure where or how to begin? A Thrivent Financial professional will listen without judgment and work with you to craft a strategy.
No matter what stage of your Wise With Money Journey you're in, we can help you explore a wide range of financial products and services to help you reach your goals.
Whether you're a savvy investor or just starting out, we can help you tailor your portfolio to your needs and goals.
We can help you explore a variety of annuities – tools that offer ways to save for retirement and generate an ongoing income stream.
With our fee-based Financial Planning Services, you'll work with a Thrivent Financial professional who can provide ongoing, objective advice and help you create a holistic, personalized plan.
MORE TO EXPLORE
You can't necessarily call unexpected expenses "unexpected." They arise for all of us. If you're not prepared for such pitfalls, they can quickly derail your financial life. Having an emergency fund in place can provide valuable protection.
Your insurance strategy can help provide protection and flexibility for you and your family. In particular, cash value life insurance can provide a range of options. And getting cash out of your life insurance may be easier than you think.
Some term life insurance contracts allow you to convert your term contract into permanent insurance. Term life contracts expire after a set time period, or "term." Permanent life insurance can last for your lifetime. Should you convert?