Since the beginning of the epidemic, in my opinion, Americans have primarily been divided into two groups: those who lost income and net worth, and those who acquired money. The consequence of relief cheques mailed out by the federal government is an excellent example of this. That money helped some families put food on the table and pay their bills. Others saw significant increases in their savings rates, reaching as high as 34% in April 2020. 1
Savings rates have decreased as the economy has reopened and individuals are once again going out and spending money. People who were unemployed for only a few months may have depended on their funds to carry them through a difficult time. However, with the start of a new year, now is an excellent moment to rethink your savings practices. Make a strategy to replenish your emergency savings account if you utilized part of the cash in it.
A well-funded emergency savings account, as well as insurance coverage for your house, your vehicles, your health, your life, and even your retirement, are all critical safety nets. Any money spent on crises might decrease not only your emergency fund, but also your retirement savings. We can assist you in developing a retirement strategy that keeps your funds on pace without jeopardizing your long-term financial stability. To learn more, please contact us.
According to a Bankrate poll from 2020, less than half of Americans (41%) had enough money to cover a $1,000 emergency bill out of pocket. Furthermore, more than a quarter (29%) of respondents said they had a $5,000 or more financial emergency. 2
The following are some pointers to keep in mind when putting money aside for an emergency:
-You should have a physical cash account rather than merely a credit card balance.
-Borrowing money to cover a major emergency bill will not get you out of trouble; it will only delay and prolong it.
-Consider opening a simple savings or money market account that is connected to your checking account for easy access in an emergency.
-Accounts with yearly fees should be avoided.
-For growth, look for accounts with a nominal interest rate.
-You should strive to save enough money to cover three to six months’ worth of spending.
If you have a family and only one source of income, you should save aside eight months to a year’s worth of expenses, and be sure to pay your health and disability insurance payments so you don’t go deeper into debt.
Setting up an automated transfer of $100 or more per month, or from each paycheck, into the emergency savings account is a wonderful method to save consistently.
Only use this account in the event of a serious emergency, such as a significant vehicle repair, a catastrophic house repair, a medical expense, or the loss of a job.
Consider giving up frequent basics that are a little extravagant if you need to minimize costs to generate a savings stream. The obvious example is the famous $4 premium coffee, consumed five days a week – this alone will save you between $80 and $100 per month. Reduce your monthly expenditure by one week for no-frills, necessities-only spending and see how much you save. 3
Examine your overall spending patterns to determine if there are any items that you pay for but seldom use, such as gym memberships, magazine subscriptions (both print and electronic), and streaming services. If you have a subscription to a channel you seldom watch, see if you can pay for one month just if there is a show you want to binge each season. Another effective strategy is to make it more difficult to spend your money. Remove your credit card from online shopping sites, for example, to make it more difficult to click your way into buying more goods. 4
We Can Assist You
It’s easy to feel overwhelmed when you’re a parent. Unexpected costs creep up on a daily basis, on top of all you’ve already done to guarantee your retirement and your child’s education.
Are you trying to find an investment advisor? Look no further than Soutas Financial & Insurance Solutions Inc. your Fresno financial planner is committed to helping take the complexity out of retirement planning. By using a variety of insurance and investment strategies that focus on Asset Protection, Long-Term Care Strategies, Legacy Planning, Tax-Efficient Strategies IRA, 401(k) & 403(b) Rollovers, Life Insurance, Annuities, Medicare, we can help you develop an overall retirement income strategy specific to you and your family.
We have a strong team of professionals helping ensure you receive all the assistance you need not only in developing your retirement income strategy, but in maintaining it throughout your retirement. Contact us today at 559-230-1648 or visit us today at Soutas Financial to get your retirement plans on track for success!
Soutas Financial & Insurance Solutions Inc.
333 W. Shaw Avenue Suite 106
Fresno, CA 93704
Content prepared by Kara Stefan Communications.
1 Kim Blanton. Center for Retirement Research at Boston College. Dec. 14, 2021. “Is Americans’ Savings Buffer Wearing Thin?” https://squaredawayblog.bc.edu/squared-away/is-americans-savings-buffer-wearing-thin/. Accessed Jan. 3, 2022.
2 Amina Mogaji. Morgan Stanley. Jan. 26, 2021. “Six steps to creating an emergency fund.” https://www.morganstanley.com/articles/emergency-funds. Accessed Jan. 3, 2022.
3 Lisa Rowan. Forbes. Jan. 6, 2021. “8 Savings Challenges To Help You Reach Your Money Goals This Year.” https://www.forbes.com/advisor/personal-finance/savings-challenges/. Accessed Jan. 3, 2022.
4 Cosmopolitan. Dec. 22, 2021. “14 easy money saving tips to try in 2022.” https://www.cosmopolitan.com/uk/worklife/a48177/easy-money-saving-tips/. Accessed Jan. 3, 2022.
We are an independent firm helping individuals create retirement strategies using a variety of insurance and investment products to custom suit their needs and objectives. Investment advisory services offered only by duly registered individuals through AE Wealth Management, LLC (AEWM). AEWM and Soutas Financial & Insurance Solutions, Inc. are not affiliated companies. California Insurance License # OK48173. This material is intended to provide general information to help you understand basic financial planning strategies and should not be construed as financial or investment advice. All investments are subject to risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values. The information contained in this material is believed to be reliable, but accuracy and completeness cannot be guaranteed; it is not intended to be used as the sole basis for financial decisions. If you are unable to access any of the news articles and sources through the links provided in this text, please contact us to request a copy of the desired reference. 1319729 – 05/22