When you’re doing your budget you have to make sure nothing slips through the net. Without an accurate understanding of what your monthly and annual expenses are you’re not able to plan efficiently for your future. It seems simple enough, but how many Americans are prepared?
Experts say that to be secure financially later in life, especially through retirement, you should aim to have ten times your final salary saved by the age of 67. However, if we take a look at what Americans have been able to save the picture begins to look bleak.
Bankrate estimated that half of the American population will not be able to support themselves with their current standard of living, once they stop working. So it seems that people are not saving nearly enough if they want to maintain the way they live their lives.
Budgeting later on in life, when you are used to a certain standard of living, can be difficult. Having to stop shopping at your favorite stores and looking for coupons and bargains could become a normal way of life for many in the future.
It’s not just long-term concerns that people aren’t taking into account when they’re budgeting. Statistics showed that in the event of an emergency that cost $1000, just 39 percent of the population could afford to cover it by dipping into savings. 19 percent of people would have to put the expense on a credit card generating debt and interest payments.
When you are budgeting you have to factor in your daily and monthly expenses as well as saving for your future. This means that you have to do a detailed budget for your current way of life and then work out how much you need to start saving to consistently be able to achieve that level for the rest of your life.
Once you have worked out how much you need to spend hopefully, there’s some left over. If not, you can cut some expenses to be able to save some cash. The next step is to work out if investing is a good option for you. According to a Federal Reserve report, if you have a 401(k) that is heavy in equities, or you have corporate stocks, you’re doing well. The average family’s portfolio is now at $340,000.
If you are looking to invest, don’t be hasty. Don’t put yourself or your family in jeopardy. “You should always look at the sensible middle ground of investing,” says Executive Vice President of David Lerner Associates, Martin Walcoe. Get advice from reputable sources once you have worked out what you need to spend and what you think you may be able to save. There are tools online that may be able to help you work out what you need to be saving, such as this retirement calculator
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