Make 2016 an Olympic Year for Savings

By FINRA Investor Education Foundation Staff

Not many of us will travel to Brazil to watch this summer’s games, let alone participate in an Olympic competition. But we can borrow inspiration from Olympians as we strive to manage our personal finances. Here’s how to embrace the Olympic spirit:

  • Don’t go out too fast. Personal finance is a marathon, not a sprint. If you’re not in the habit of saving regularly, you run the risk of injury by doing too much, too quickly. Start by setting up an emergency savings fund. An emergency fund will help you outrun new debt, and clear the financial hurdles you’ll encounter along the course.

  • Shed some weight. We don’t mean from your middle, but off your shoulders. Paying down existing debt, and avoiding new debt, is like changing your footwear from combat boots to racing flats. Like your running pace, your savings pace will improve dramatically.  

  • Slow but steady wins the race. When it comes to saving for the future, many Americans are not going the distance. More than 40 percent have no retirement account, while more than 60 percent of parents haven’t set aside money for their children’s college tuition. If you fall in either (or both) of these camps, step up your training during this Olympic Year. A spending plan is a great way to start.

  • Set a high bar. How much can you save? Experts recommend saving 10 – 15 percent of your salary, but any amount will help. Set interim goals, like qualifying rounds at the Olympics. You might be able to save $100 from each paycheck, or max out your 2016 annual IRA contribution ($5,500, plus a $1,000 catch-up if you’re 50 or older) or Thrift Savings Plan (TSP)/401(k) at work ($18,000, plus a $6,000 catch-up if you’re 50 or older). Put your money to work for you as early as you can, and allow time and compound interest to do the rest.

  • Don’t forget about your teammate. If you’re married, your spouse can be your strongest supporter along the route. Run your race strategically. Share your financial goals with your partner. Draft each other in difficult times to keep your team out in front.  

  • Anticipate a final kick. Many savers log their most productive saving years in the decade or two before full retirement, so don’t worry if the finish line seems far away. Your ability to “keep running”—to earn a living—is likely the most valuable asset you possess. Keep that asset, known as your human capital, in Olympic form by staying healthy, improving your education and training, and engaging with an ever-changing world.  

  • Go for the gold. Make a saving and investing plan for 2016 and stick with it! Take the Savers Pledge at MilitarySaves.org, and set a goal, make a plan and save automatically.

Need some pointers on how to get started? SaveAndInvest.org can help.

 

 

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