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Get Rich Slow: Make Smart Savings Decisions at Every Age

Get Rich Slow: Make Smart Savings Decisions at Every Age

With every stage in life, good financial planning involves identifying your personal goals and setting up ways to save money that you're comfortable with. Learn how to invest in yourself and chart your savings roadmap with these take-charge strategies.
By 
Nora Dunn
Updated:
2013-02-27 15:49
Published:
2013-02-28 15:04

Savings Strategies From Childhood to Early Adulthood

There's no one-size-fits-all key to financial planning. In fact, a successful money-saving strategy should evolve throughout your life. Use this roadmap to navigate the basics.

Kid
It's all about learning; parents can instil a proactive and fun approach to saving.

Goals
Understanding the concept of saving money; setting attainable goals to buy small items, giving a sense of accomplishment.

Saving strategies
Parents can provide incentives while introducing the benefits of delayed gratification (saving money requires patience).

Make it fun with a piggy bank so kids can see their savings accumulate.

Kids can invest monetary gifts from friends and family in their first bank account; many banks offer fee-free debit transactions on youth accounts so small savings aren't automatically swallowed over time by bank service charges.

Teen
Along with growing independence comes increased fiscal responsibility. Parents are instrumental in helping teens understand money-saving concepts and strategies.

Goals
Saving for more expensive gadgets or perhaps a car (and associated ownership expenses); learning to budget.

Saving strategies
Parents can teach teens about different investments, participating in the family budget and managing allowances or part-time income. These skills will prepare them for the rest of their lives.

Savings vehicles for teenagers include short-term high-interest savings accounts, which are ideal for accumulation and protection of capital.

Single adult
Being a single adult is all about cash flow: balancing income, debt and savings. When first on your own, it's easy to get derailed by the cost of living; it's important to keep a sharp eye on budgeting. This is also a pivotal opportunity to jump-start long-term savings.

Goals
Paying off student loans; setting up first place to live; saving for major purchases such as a home; starting retirement savings.

Saving strategies
It pays to take the long view at this stage and save whatever you can, even if it's small amounts. The sooner you start saving (for a down payment or retirement, for example), the more you'll benefit from compound growth. And the larger your down payment is, the lower your mortgage payments will be.

Because you're balancing multiple goals, it's important to budget and proportionately save toward each goal. Automating savings plans with regular transfers from your bank account to dedicated savings accounts and investments are the easiest way to manage and stick to your goals. You're basically harnessing the power of "out of sight, out of mind."

Short-term savings are best invested securely in high-interest savings accounts, medium-term savings can be in slightly more volatile vehicles (such as balanced mutual funds with a mix of fixed income and equity investments) and long-term savings can be put in higher equity vehicles (dependent on your time frame and tolerance for risk).

 

Illustration, Fresh Juice.

Issue

Fresh Juice: February/March 2013

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