“The debt situation could change that if you have a ridiculous amount of student loans or super high-interest personal loans or something like that. Whether you want to be able to save more or to reallocate that to other, hopefully more fun, expenses,” he said.Īfter your emergency funds are taken care of and insurances are set up, the first investment to make is your 401(k), or at least taking advantage of your company’s match if applicable. “Make sure that you’re able to beef up the amount of money that you can save for the rainy day, the emergency fund, because once you have that, then you have more discretionary money. You can save that, you can direct it to a bank, a checking account, a savings account, even a broker’s account that is invested in fixed income,” said Simmons. “We all need to have some sort of emergency basket of funds that we can collect from for whatever reason 3-6 months of living expenses. “But if you find yourself spending hundreds of dollars in miscellaneous categories, figure out where you’re actually spending that money and perhaps it’s something where you can find savings because you’re wasting or spending money where you don’t really need to.” The detailed you can be, the better that budget is going to be,” said Simmons. “Whether it’s a 50%-25%-25% or whatever those numbers can be, find something that you can be successful with … The purpose of the budget is to hold you accountable in some sense for your spending. Therefore, setting aside your savings first and budgeting yourself within your means for those needs can also be a good way to build saving and budgeting habits. Your balance in your portfolio, and how diversified you are,” said Wybar.Īlong with paying your bills and purchasing necessities, saving for your future is the second-highest priority.
A recommended method to approach this step is focusing on what you can control – “trying to keep your costs down.
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