Quick tips on Saving - American Psychological Association · Every 10 years you delay retirement...
Transcript of Quick tips on Saving - American Psychological Association · Every 10 years you delay retirement...
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Quick tips on Budgeting and
Saving
Compiled January 2015
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Budgeting
Know what you owe
Face your federal loan debt at nslds.gov
Round up your credit card statements
Get to know your habits
Set a budget
Then track your money for two months (paper or app)
Compare budgeted vs. actual
Learn new habits
How can you outsmart yourself?
Personal experience: I am a better saver when I automate savings, debt, and set dates
When do you want to be debt free?
Do you have enough for fun and “not-so-fun” times?
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Budgeting
Minimize debt by trying to live frugally
Roommate? Biking? Skip the latte? Cook?
Cash only diet—hide the credit cards
Increase income
Freelance, dog-sitting, a very part-time job
For borrowers
If you can, pay your interest as it accumulates so it will not be added to your principal loan amount.
Look for repayment options before graduating: studentaid.ed.gov
Only 18% of eligible borrowers are on income-based!
Beware of private (non-federal) loans.
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Savings
Retirement savings
Consider a plan with a 9% interest rate
Contribute $2,000 for 35 years from age 31 to 65
Your $70,000 will grow to $470,249!
Every 10 years you delay retirement savings, you’ll need to triple your savings to catch up.
Immediate savings
Just $2 a day with 5% interest = close to $10K after 10 years
A yearlong strategy
$1 in week 1, $52 in week 52
$52 in week 1, $1 in week 52
0% interest = $1378 after one year
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Savings
instrument Maturity risk yield minimum balance
taxable?
Savings Account
Immediate None if insured Low $5 Yes
Certificate of Deposit
90 days or more
None if insured Moderate Varies Yes
Corp. Bonds 5–30 years Some Moderate $1,000 Yes
Muni. Bonds 1–20 years Some Moderate $5,000 No federal,
some states
Stocks Immediate Low to high Low to high Varies Yes
Treasury Bonds
10–30 years None Low $1,000 Federal only
Mutual Funds Varies Low to high Moderate Varies Usually
Retirement Funds
When buyer is
60 years old
Low Moderate Varies At maturity
Source: practicalmoneyskills.com