Hello and welcome to my personal finance blog, Impulse Saving. What is Impulse Saving you might ask? Well, impulse saving is the opposite from impulse buying. It is the urge to save without thinking much about it. You've probably already experienced this when you got your first savings account (if you actually used it). You may have been given a lesson about saving by your parents and may have been compelled to put some extra money first in a piggy bank and then in a savings account without thinking much about it, mostly because people told you that you should.
This was most people's experience with impulse saving and hopefully it wasn't your last. Did you forget to save after this important lesson? Don't despair, many Americans are saving less than ever before in our history. In fact, our national savings rate fell to nearly zero in 2011. Unfortunately, this has dramatic consequences with more instability when job loss or a economic downturn occurs. Also, if not addressed soon enough, this can cause the worst case scenario which is insufficient savings for retirement.
Retirement savings is absolutely crucial to your financial health as you age. One thing is for sure, we will all grow older. Do you want to live comfortably when you get there? Sure, we all do, but it takes conscious financial planning to do so.
So, how much money will you need when you retire? Experts say that the average person will need 80% of their working income in retirement to live comfortably. The sad thing is, many Americans do not have nearly this percentage saved which causes retirement poverty and forces people to work into their 70s and even 80s as their body becomes more and more frail and unable to do the work. Elderly people in this situation have to choose between food and healthcare which causes poor health, hunger, and unhappiness in what should be their "golden years."
Let's reverse this trend. Let's start a movement! Start today, not tomorrow, not next year... Start impulse saving today. Start an automatic savings plan. Many banks allow you to automatically transfer a certain dollar amount from your checking to your savings without even thinking about it. You'll be amazed at how fast it grows!
Also, don't be afraid to invest your money! You don't have to be very risky or be an expert either. I'm talking about maxing out the match on your 401k. If your company matches a certain percentage (ie 100% company match for the first 6% contributed) you simply CAN NOT pass this FREE MONEY up! That's right, this is FREE MONEY and if you don't contribute at least enough to get the maximum match you have no one to blame but yourself. This is 100% interest on your money. Try and get that anywhere else.
Then, depending on your comfort level, invest in stock, but not risky stocks. Invest in large, stable companies that pay a good dividend. There are many companies that will reward you anywhere from 3-5% (or more) interest just for holding their stock plus whatever gains (or losses) the stock has each year. There are risks but you are much better off with the prospect of getting a healthy return instead of just keeping your money in a savings account. If you're not comfortable with individual stocks, try a mutual fund or an etf.
It may be scary, but it's crucial to invest your money and get paid interest on your money equal to or greater than about 3% each year (this is an average of the annual rate of inflation). You must try to get interest on your money equal or greater to the annual rate of inflation just to not lose money. If you just "play it safe" and keep your money in a savings account with little to no interest you will actually be losing 3% of your money each year (or more) due to inflation.
In the end the choice is yours. Do you want to start saving and start planning for your retirement? I hope the answer is yes and if it is, you should start impulse saving in your life today!
Disclaimer: This blog is not intended to render specific financial advice and is for educational purposes only. Please see a licensed financial advisor to before making important financial decisions.
