My youngest daughter has the right idea. She doesn’t want to own a car or buy a house right now. Better yet, she’d rather save and invest money.
If you’re working or between jobs, savings always gives you flexibility. Being out of debt and not having obligations gives you freedom.
Despite what our consumerist society blasts at us at all hours of the day, the more you buy, the more you owe. New clothes or wheels doesn’t make you a better person. I always preferred having money to spend, but being able to invest it.
How do you get on the right track? Automatically save. Do it on your phone or other mobile devices. Set aside three buckets:
1) Short-term expenses. This is for monthly bills. Keep these funds in a checking account.
2) Mid-term Goals. Say you’re saving for a house, business, graduate degree or car. An insured money-market fund is a good place for this cash. Again, automatically take money out of our checking account for this stash.
3) Long-Term Goals. Want to retire? Save regularly in your 401(k), 402(b), 457 or Roth accounts. Keep in mind that this money shouldn’t be touched until you reach age 59 1/2 or older, unless you want to pay income taxes and penalties.
What can keep you on track? I always suggest apps that you can run on your mobile or desktop devices. Here’s a guide to some of the best tools.