Answers to 7 Money Management Questions You’ve Been Asking
Manage your money and boost your retirement fund.
Money management takes time, patience and some knowledge. While you don’t need to be an expert, you need to understand a few things to make the best decisions and plans. Here are the answers to the seven most common questions to help manage your money more effectively.
1. When Should I Start Saving for Retirement?
When you’re young, retirement is that thing that old people do and you believe there’s plenty of time to plan for it. However, you’ll soon find that having the income you want in retirement takes time to save, so when should you start? The real answer is as soon as possible. You need to give yourself as much time as possible to make it easier on your current financial budget.
2. How Much Should Go Into My Retirement Pot?
This differs for everydiv. You want to set the percentage of your salary that you will put into your retirement plan based on your current budget. As your budget changes, the amount you save can change. Save as much as you can in your retirement pot to make it easier later in life.
3. Can We Really Afford a Baby?
It’s a big question for those starting a family. You’ll hear people telling you that you’ll never be financially stable enough for a baby, but that doesn’t mean you should stop your money management plan. It’s worth considering the fact that a child costs around $200,000 for the first 18 years of his or her life. Remember that is spread over the course of 18 years; you don’t need it all right now!
4. Do I Really Need the Emergency Savings Fund?
You should have a fund just for emergencies. You never know when something happens and you don’t want to get yourself into debt for the sake of your car breaking down or the washing machine needing replaced. You’ll also need something in case one of you loses your job.
Split your finances up in different pots to make managing it easier.
5. How Much Emergency Money Is Needed?
It can take up to a year to find a new job, especially in the current climate. You realistically want an emergency fund that will cover at least six months of your outgoings. Build that up gradually right now by setting a budget and creating a plan for your emergency fund.
6. Should I Save or Clear Debts?
You want to try and do both at the same time, but clearing off debts is better if you have to choose. Debts rack up higher amounts of interest than you could even save. Work on one debt at a time and then move onto the next to help with money management. If you can, at least save up your emergency fund while clearing debts.
7. What’s the Different between Traditional and Roth IRAs?
There are two types of IRAs: traditional and Roth ones. The difference is when you end up paying tax on the money you save. In a traditional IRA, you pay the tax when you withdraw the money for use in retirement. With a Roth IRA, you pay the taxes when you pay the money in.
Those are the answers to the seven most common money management questions. Budgeting is the main factor in all of this, which is something Mint.com can help with. With the free software, you can track your expenses and see how close you are to your savings goals at a glance.
Alexandria Ingham is a freelance writer with experience in technology, personal finance and budgeting.