Every Cent Should Be Saved if it’s Not Spent

by Justin Weinger on December 13, 2012

Now may be the most important time than ever to start being aggressive with the amount of money you are saving.  It’s staggering when you hear the percentage of households living paycheck-to-paycheck, and that’s even after the fiscal scare of 2009.  Well, the impending fiscal cliff should cause a similar amount of worry and preparation, though it doesn’t appear to be the case.  The old norm for finance experts recommendation was to have six months of expenses saved up.  I would say that this advice is old hat, and the recommended number is actually much higher now.

I would agree that in today’s financial climate you should have a minimum of a years expenses saved up in the bank.  However, that is far from being the only funds you should have saved.  This is the amount I recommend you have in a bank account separate from the one you should be using to save for a new car, a new house, and especially retirement!  It’s that account that I think you need to have significantly more than a years worth of expenses saved up.  You need to be on track based on the amount of years you have left until retirement.

I want to take this discussion a step further by saying that these two accounts should still not be the only means of savings you have.  Let’s not forget about your 401k account, IRA’s, and investment/brokerage accounts.  The tax deferred benefits of these accounts can help add to that nest egg.  Not to mention the returns tend to be attractive if you can stomach the related risk.  It’s all of these accounts collectively that should aid you in saving for future financial obligations, and the most important of those being retirement.

It stands to reason that every cent should be saved if it’s not spent, and a savings account from BM Savings may be just right for you.  That means that after you are paid each period, you deduct your living expenses, various financial obligations, entertainment spending, charitable giving, and you are literally left over with an amount of money suitable for saving.  If you are being financially prudent this should be a significant portion of your earnings, and an amount of money not to be taken lightly.  That is why you need to be careful in how you invest it, and where you save it.  When choosing the right savings account make sure you do your homework and then make an education decision.

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