Stock investing for dummies
For many people, New Year’s is about change. Whether it’s resolving to lose weight, learn a new language or connect with old friends, January 1st gives everyone an excuse to make the changes they need in their life.
But have you ever considered setting financial goals? Creating smart money habits will benefit you beyond the new year, and a little effort can go a long way when it comes to your finances.
Here are some ways you can up your savings game in 2016.
1. Emergency Fund
If you do one thing this year, start an emergency fund. Without a designated fund, small emergencies can snowball into large financial issues. You can use emergency funds to pay for minor, unexpected problems or huge, lifechanging disasters. The important part is being prepared.
For example, if you need new tires and don’t have the cash to buy them, you’ll have to put them on a credit card. The average cost of four new tires is $637. With a verage credit card interest rates at 17%, your new tires have just bought you a oneway ticket to debt.
But how much should you put aside? If your job is stable, you can get away with three month’s worth of expenses. If you own a home or are selfemployed, it’s better to save six months to a year’s worth. For people paying off debt or living on a low salary, keep at least $1,000.
When your emergency fund dips low, consider living on a shoestring budget until you get it back up. Only use the money for unpleasant surprises like a car accident, trip to a funeral or hospital visit. It’s better to cut back expenses on your own terms rather than being forced to because you were unprepared for an emergency.
Looking for a tool to help? Consider looking at Digit. This app/tool automatically moves money into savings for you based on your spending trends.
2. Start a 401k
If your employer offers a 401k with a matching program, start contributing to it. Before you sign up, check the vesting schedule. The vesting schedule determines when you’ll be eligible to take the portion that your employer has contributed.
Not all companies allow you to remove employer contributions right away. Some make you work for several years before you’re eligible. If you plan to leave before the employer contributions are fully vested, then move on to the next step.
3. Pay Off High Interest Debt
This year, resolve to become debt free. Cut unnecessary spending, create a budget and put extra funds toward your loan payments.
– stock investing for dummies