quick tips on saving - american psychological association · every 10 years you delay retirement...
TRANSCRIPT
Quick tips on Budgeting and
Saving
Compiled January 2015
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?
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.
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
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