Being financially secure does not happen by accident and there are probably many people that wish they had taken the time to plan their financial future a little better. If you listen to the experts, they will tell you that all you have to do is save a moderate amount each month beginning at a young age. And really it is that simple, but for many of us that “young age” passed a long time ago and we are now scrambling and brain storming to figure a way of avoiding living on the street when we reach whatever we consider retirement age.
When people say it is never too late, they are right. But delaying a plan for saving or a debt management plan, if that is what is needed, will limit your options. Once you are faced with a problem, the sooner you begin researching and implementing a solution the better off you are going to be. You will also have more desirable choices if you address problems quickly.
When they say pay yourself first, that is some advice you need to take to heart. I have found that money that is taken directly from your paycheck before you see your check is generally not missed. Many people do this with the income tax withholding. Rarely do people figure what they need to have withheld to cover only what they are going to be taxed. They have extra money withheld looking forward to a nice return from the government. Why not take the extra money and have it automatically deposited into some type of a savings plan. That way you can make the interest on the money instead of the government.
Employer retirement plans are a great place to start saving, if they have an employer match. The company I work for matches 6% and as long as I put 6% of my income into the plan, my employer will give me 6%. Free money…it doesn’t get any better than that. But this is money that basically has to stay where it is until the age of 59 and ½. You will also need a financial resource that is liquid and can be accessed immediately in case of an emergency.
A Roth IRA is an excellent choice for an emergency fund, but I would recommend keeping a thousand or two in a basic savings account or money market account for quick and simple access. Remember you want the money to be easily accessible. You are not looking for a big return on investment. You are looking for something that will be available when you need it. The only way that you can be financially secure is to be prepared for the unexpected.