Smart Money Moves To Make Before Age 35

Feb 14, 2012

By Staff Writer State Farm™ Employee

Nobody wants to learn that it’s too late to save for a satisfying retirement, but a lot of Americans are on that path. The latest numbers from the Employee Benefit Research Institute indicate that 29 percent of employees have less than $1,000 saved for retirement; 56 percent have less $25,000.

To help avoid being an unhappy statistic at retirement, you may want to consider these smart money moves.

Start a retirement fund.  Ornella Grosz, author of Moneylicious: A Financial Clue for Generation Y, says the easiest way to save is to set up automatic deductions—either by percentage or dollar amount—from your paycheck.

How much? “I say start small and build on it,” Grosz says, advising to try reserving 5 percent of your paycheck for retirement. If you don’t miss that money, try 7 percent, and if that works out, increase your savings to 10 percent.

Develop a strong credit score.  The higher your score, the lower your interest rate may be on loans, from your mortgage to your car. You can save thousands of dollars over your lifetime by keeping your credit score as high as possible. The surest way to a high credit score? Pay your bills on time, in full. And be sure to review your credit report each year.

Evaluate the real cost of purchases. If you buy a $2,999 TV on a credit card, and you make minimum monthly payments of  $119.96 (4 percent of the debt), you’ll need 41 months to pay off the purchase.  That means you are actually spending $4,918.36 on the TV – and, by the time you retire the debt, your TV may need to be replaced.

Another money mistake: incurring late fees. Many credit cards charge 10 percent of your balance if you miss a payment deadline. On a $5,000 balance, that 10 percent fee represents a significant penalty.

Fund an emergency account. Unexpected expenses will always be a part of your life, but having money available in an emergency account can help soften the blow. A commonly held belief is to have three to six month’s living expenses available, but accumulating that amount may be difficult when you’re first starting out. The important thing is to create the account and fund it regularly. Set an initial goal of putting $2,000 in an interest bearing account, then build up the fund as your income grows.

State Farm® has a variety of online calculators that can help you develop smart cost and savings strategies.

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The information in this article was obtained from various sources. While we believe it to be reliable and accurate, we do not warrant the accuracy or reliability of the information. The information is not intended to replace the advice of a qualified professional. Nor is it intended to effect coverage under any policy. State Farm makes no guarantees of results from use of this information. We assume no liability in connection with the information nor the suggestions made.

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