One of my most important financial goals is my aim to save approximately 10 percent of my income. This is not always possible,and sometimes I end up saving much less than this,or even borrowing money rather than saving,but I always try to make up for this by saving a little,but extra once I can. Your savings are an important safety net. In an emergency,they could make a huge difference to your life and your finances. If you suddenly have to pay medical bills,for example,or cope with the loss of your job or an unexpected new addition to the family,then some extra money will be a lifesaver.
Paying off your debts should be your priority. In most cases,your debts will be growing faster than your savings will be able to,so you will actually be losing out if you try to save while you are still paying off your debts. There are some exceptions to this,however. If you can make more money from your savings and investments than you are paying as interest on your debts,then saving can be a good idea. It can also be sensible to start saving money in a pension or retirement plan,even if you have debts.
If you are ready to start saving,then you have many different options from which to choose. A savings account is one of the most convenient ways to save. It can be linked to your checking account,and the money in your savings account is safe. The interest rates are usually low,however,so they will not generate a high return. If you can take out a tax free savings account,then you should take advantage of opportunity to save your money without paying taxes on it.
There are many other forms of retirement,which have various different risks and returns. A fixed rate bond,for example,will provide a set return over a specified period,at no risk to your investment. Stocks and shares,on the other hand,are very risky. They can produce high returns,but you could also lose your investment.
Retirement plans are another option. They are relatively safe,although it depends on the type of retirement plan that you choose. Putting your money into a retirement plan will provide you with financial security for the future,and if you are able to participate in a plan such as the 401k,you also save on tax. Your employer may also match your contributions into the plan,doubling your savings.
Another good option is to invest in property. The value of your property may fall,but it is still usually better to pay a mortgage than to pay rent,if you intend to live in the same area for the foreseeable future. You will end up owning the property in the end.
Other,more unusual savings options are also available. You might choose to invest in gold,for example. This is a stable form of investment. If you want to take a bigger risk,you could try buying art or antiques,although it is difficult to predict their future value accurately.
Saving money is always a good idea. You should try to save regularly if you can,although eliminating your debts may be more important. When choosing where to place your savings,you should avoid options that have high running costs. You should also spread your savings out between a number of different savings options with different levels of risk and return. Low risk savings will provide you with security,while higher risk ones may generate some higher returns.
