Save - Your Money Mom

Why and How to Calculate Your Savings Rate–and Increase by 1 Percent

January 29, 2020 by Nancy

Time commitment: 20 minutes or more, depending on how long it takes you to decide what to include, and to find the information if you do not have it handy.

WHAT is a savings rate, and what should you include in it?

A savings rate is the percentage of your income that you save over the course of a year.

To give a super simple example, if you make $10,000, and save $5,000 of that money, you have a 50 percent savings rate. If you save $1,000, you have a 10 percent savings rate.

However, it can get tricky defining both income and savings. There is a wide range of what people include or exclude from both.

*is income before taxes or after taxes?

*does savings rate include the match that your employer contributes to your retirement plan at work?

*does it include the principal reduction in your mortgage or student loans over the course of the year?

Here’s one explanation from Investopedia on savings rates.

Know that there is no right way or wrong way to do this. You should consider the options, and include what makes the most sense for your situation.

Here’s what I do:
*use after-tax income as the base
*include 401(k) and other retirement savings accounts
*include the match for employer contributions
*include principal reduction in mortgage each year

(note: this is not how much you pay for your mortgage–or student loan, if you’re including this)–but how much your mortgage is reduced. That is easily found by checking the mortgage amount at the beginning and end of the year. The difference between the two is your principal reduction.)

I add up all the savings, and then divide it by after-tax income, and that gives me our savings rate.

Why is a savings rate important, and why should you know yours?

A savings rate is important for several reasons.

*A decent savings rate shows you can live within your means.

*Knowing your savings rate can help you set a goal to improve that number. Yes, even by 1 percent!

*A good savings rate can lead to financial independence and freedom.

There’s a famous blog post recommended often to explain the concept of savings rate and why increasing that number makes so much sense. “The Shockingly Simply Math Behind Early Retirement” on Mr. Money Mustache. This post is worth reading just for the math concepts he covers–while this site has a lot of solid information, I definitely do not agree with all of it or his website.

It’s also worth playing around with this calculator to see how different savings rate leads to a different number of years until financial independence.

How often should you calculate your savings rate?

In general, annually.

Bonus: if you are not happy with your savings rate once you do calculate it (or even if you are), consider taking the time this week to bump it up.

Take a moment to log into your work’s retirement account, and increase your contribution by 1 percent. You most likely will not notice the difference, but you will be automating saving so that you do not have to actively save in future.

WHERE should you (save money)?

Everyone’s situation is different, but here are some general ideas of places to save:

Roth IRA

This is really preferred for anyone who is eligible to open one, because the money goes in tax-free, and all the growth is tax-free. That goes double for teens and younger workers with relatively low income.

Work Retirement accounts

Those who work “w-2” type jobs often have a 401(k), 403(b), or other type of retirement savings vehicles. And many employers offer to “match” your contributions, which can also add to your savings rate.

If you’re self-employed, you should have an IRA of some kind that you can contribute to.

Taxable accounts

This could be at an higher-interest savings account bank (like you use for your multiple money funds , or a taxable brokerage account for longer term goals.

How to calculate your savings rate.

As noted above, your savings rate is very specific to you or your family. Just like your net worth, you might want to include things that others don’t, or exclude categories that others do include.

If you are on my e-mail list (sign up at the bottom of this post if not), you received a very simple spreadsheet this week to help you calculate your savings rate, and you can play around with it, adding in whatever makes sense to you.

I also found this online savings rate calculator. While it is still pretty simple, it is a little more complicated than mine.

Week 3 e-mail: Open Multiple “Money Funds”

January 23, 2020 by Nancy

It is Week Three of 2020: The Clarity Project, a yearlong effort to get organized and simplified with your money.

This week, I’ve been busy with:

*the start of the semester for my college kids. Family tradition–which we got from the Betsy-Tacy books–is muffins for the first day of school. I make my kinda-famous pumpkin/flax muffins, and they are delicious. Let me know if you want the recipe.

*trying to incorporate more protein in my diet. I keep reading about the importance of this, and I thought I would try easy things to do so this year. I even ordered powdered egg whites, but I’m not really sure how to use them (mixing them into eggs did not work. At all). In smoothies maybe?

*walking in our neighborhood instead of running, since we have had snow and ice here in Illinois, and more is forecast for the next few days. Despite this, we have had some lovely colors in the sunrises and sunsets. I love winter skies. Photos do not do the winter sky justice, but here is one from last week, early morning:

*writing and ordering a talk that I’m giving to a local young moms group next week. The title? “A Mom’s Money Toolbox.” I enjoy this process so much! I will post notes and resources for this, and share once it’s up.

What is new with The Clarity Project?

I intend for these (mostly weekly) e-mails to be quick to read, easy to understand, and simple to implement.

Simple, but not necessarily easy.

The word for January is SAVE.

This Week’s SAVE Challenge: Open up at least one “money fund” and automate savings to the account(s) weekly or monthly.

The challenge has a blog post with resources and more about the topic.

As with the others, this post follows the 5W1H format–who, what, when, where, why, and how.

Here is my weekly reminder to you: you may be way ahead of a particular challenge, or way behind. It is okay either way.

But you can take some kind of action on the challenge, even if that is just learning about the topic. Studies show that people often have to hear about something seven times before it “sticks.”

This week, I write about why it’s a good idea to have money for different goals and expenses in different accounts, and how to do this. Read it here.

You can reply to this e-mail with any questions, suggestions, or anything else. I love to hear from you!

Remember, you’re doing well with your money, and you can do better.

All the best,

Nancy

Your Money Mom

Seven “Money Funds” You Should Open for Your Goals

January 22, 2020 by Nancy

Your challenge: Open up at least one “money fund” and automate savings to the account(s) weekly or monthly.

Time commitment: one half hour to one hour.

I wish I had a better name for “money funds.” Many personal finance websites call these “sinking funds,” but that name just annoys me. If you have a good catchy alternative, let me know.

What are “money funds” and what kind should you have?

A “money fund” is simply a dedicated account to save for a specific planned expense or goal in the near or far future. So, for instance, you could have a “travel fund” to pay for your $2,000 summer vacation. If you put $200 in each month, you will have enough for that vacation in 10 months.

I recommend having multiple money funds for different goals and expenses. Here are seven categories you might consider:

Emergency Fund:

This is the first, and most important, money account to fund. As covered before, you should start with a bare minimum of $1,000 (and eventually more). Having that separate from your other money funds is a great way to keep the emergency fund “safe” and allow you to spend the money in other accounts guilt free on those goals.

Charity:

A dedicated money fund for giving to charity is a great way to build up the amount of money you have to give away. This can also be helpful if you try to give larger amounts at certain times of the year, such as during Lent or before Christmas. You can use this fund to give to your church or other charity regularly and also give to specific causes.

You can even use this charity account to fund a donor-advised fund, allowing you even more freedom in when you give; tax benefits, and more.. Here is more about donor-advised funds.

Travel:

If you know that you often spending a certain amount of money each year on travel spending—such as visiting in-laws or other families for Christmas, and other vacation plans— have a travel money fund.

For example, if you spend about $3,000 a year on travel, putting aside $250 each month will easily help you cover those costs without being “stretched” when the actual travel is occurring.

Education:

Let me just say that I feel you on this one, since my husband & I have two children in college and one in Catholic high school. It’s so difficult to make a big dent in their college costs (that’s why this Onion article-satire/kinda-is an evergreen favorite), but every bit helps.

A 529 plan for most families is the best way to have this education savings account—but most times, only for college. Some states, but not all, allow parents to use 529 plans for private elementary and high school costs. Illinois is one of those states that do not allow 529 spending for school before college, so we have a separate money fund for high school tuition.

It is hard to give an example in college savings because it’s so variable. Just opening a 529 or other money fund and putting something in there regularly is a good idea.

House:

This money fund is key for both renters and homeowners. If you are a renter, this account can be earmarked for a downpayment for a house. Even if you’re not sure when this might happen, it’s not a bad idea to have a specific account for this. The money could always be used for home purchases such as furniture or other improvements.

If you are a homeowner, the rule of thumb is to save between 1 to 3 percent of your home’s value each year for repairs. So work to get your savings rate in this fund to this level ASAP.

So, for example, if your home is worth $100,000, plan to save about $1,000 to $3,000 per year. Some years you will spend way less, and some you will spend way more (new roof or furnace).

By the way, the 1 to 3 percent savings guideline is separate from a home renovation project, such as redoing a bathroom or adding a deck.

Auto:

The more you can save here, the better, since car loans are not generally a good idea, or at least keeping that number down as much as possible is ideal.

This fund would be for both the cost of repairs to a current vehicle or vehicles, but you can also figure out your annual costs for registration & insurance here, gas, and any repairs and divide that by 12 months, and save at least that much, if possible.

It’s also a good idea to save for your next vehicle. A good way to do this easily: once you have paid off a car loan, divert that amount of money (and more if possible!) into the auto money fund.

Christmas & Birthdays:

Have you heard of a “Christmas Club”? (and not the Hallmark movie, which is very loosely based on the original concept).

For all you younger readers, banks would have accounts called “Christmas Club” accounts, dedicated to Christmas spending. Account owners would deposit small amounts–actually in person. If you made regular deposits, come Christmas, you would have a good chunk of guilt-free money.

[The origin of Christmas Clubs is semi-interesting, if you’re inclined to learn about it.]

Especially if you have a lot of family to buy gifts for (or gift-giving is one of your love languages), have this kind of money account.

There could be many other types of money funds, but you get the picture.

Why should you open multiple money funds?

You should open multiple money funds for many reasons, but this is mostly a “money mindset” tip.

Money mindset is much more important than we realize in achieving what we want related to money. This is a great post explaining how you can grow rich thinking about money—not in a “woo-woo” way—but in a way of paying attention and developing intention with your money will lead you to make smarter decisions in your financial life.

You don’t “have to” set up multiple money funds. In fact, we did not for many years—we just one account for everything—emergency fund, etc. You could just keep it all in one account and use as needed. That’s because all of your money is your money. It doesn’t matter whether you won it in the lottery or earned it from your job, or if it’s in an account called “Travel” or not.

But the mere process of “dividing up” between different funds is helpful in seeing your money. If you have $12,000 in a house fund, you are better able to fund a bathroom remodel, or think about a down payment on a house, or buy your next car. For our family, it’s been a truly helpful process to see what we have in different funds, and if we are spending and saving our money based on our highest values.

Having multiple money funds helps you have clarity about your money and then spend with intention.

Now we have accounts in multiple locations, all earning more interest than the typical savings or checking account that earns tiny amounts of interest.

Who should open multiple money funds?

Everyone. For instance, even a teen can set aside $1,000 for an emergency fund, even if they still live and home and parents take care of their housing, etc. And then open several other savings accounts for near-term and far-term goals.

Ramit Sehti writes about how saving for something you know will probably happen in the future—a wedding, a house purchase—you can easily save up large amounts by small contributions each month from a young age.

For example: If you are 25, and think you’d like to buy a house when you’re 30, you would have $12,000 (more with interest) if you put away just $200 a month towards this goal. Automating it is the way to do this most successfully.

Where should you have your money funds?

Money funds should be in something easy to access—but maybe not too easy, so you’re not tempted to take it out. You should also try to get as much interest as you can. Online banks usually have the best rates.

I am familiar with Discover Savings Accounts and Ally Bank. I also have clients who use Capital One Savings Accounts for their money funds.

Most online banks allow you to set up easily multiple accounts each with different names. And the interest rate is usually pretty high, comparatively and at much higher rates than at your local or national bank.

How to open multiple money funds

My advice? Make it as easy as possible. Open savings accounts at an online bank or credit card company if you already have a relationship with them.

It is very easy to open a savings account at any of these online banks—here are a few screenshots. If you already have an account (for instance, if you have a Discover credit card), it is even easier. Repeat the process for as many accounts as you want.

Discover

Capital One

Ally

There are many other online banks and services to choose from, so if none of these is a good fit for you, do some research and choose another. But getting started, and automating your deposits into those accounts (however small), is the most important thing,

THIS POST MAY CONTAIN AFFILIATE LINKS. PLEASE SEE MY DISCLOSURE FOR MORE INFO.

Week 2 e-mail: Check Your Retirement Savings

January 15, 2020 by Nancy

It is Week Two of 2020: The Clarity Project, a yearlong effort to get organized and simplified with your money.

This week, I’ve been busy with:

*a lot of writing, including some freelance work;

*a fair amount of trying new recipes (these quinoa-spinach patties were not bad, but I probably won’t make them again);

*a modest attempt to do some January cleaning/decluttering along with two IG favorites, Stephanie Weinert and Kathryn Whitaker who host a two-week long Organized Simplicity challenge. And seeing new posts often from this mom-of-many, Lindsay Boever, organizes her house (and deeply cherishes her children) is inspiring. I’ve read her blog for years but seeing her more active on IG is a lovely breath of fresh air.

*missing the Young House Love Has a Podcast, on break until February, I think? But I have been filling in with many others in my feed, including Dolly Parton’s America.

*on Sunday evening, literally yelling at the television when my middle daughter and I watched the first episodes of the adaptation of Jane Austen’s last, and unfinished novel, Sanditon. It was beyond terrible. The next night, we had to re-watch some of the wonderful 2016 adaptation of Anthony Trollope’s Doctor Thorne to clear our minds.

But I digress–back to The Clarity Project!

I intend for these (mostly weekly) e-mails to be quick to read, easy to understand, and simple to implement.

Simple, but not necessarily easy.

The word for January is SAVE.

This Week’s SAVE Challenge: Check your retirement savings and your contribution rate. Bonus: increase your contribution by one percent (or more!).

The challenge will have a blog post with resources and more about the topic.

Each challenge will follow the 5W1H format–who, what, when, where, why, and how.

Here is my weekly reminder to you: you may be way ahead of a particular challenge, or way behind. It is okay either way.

I wrote about retirement savings, the different kinds of accounts, who should have them, and more, in this week’s post. Read it here.

You can reply to this e-mail with any questions, suggestions, or anything else. I love to hear from you!

Remember, you’re doing well with your money, and you can do better.

All the best,

Nancy

Your Money Mom

The 5W1H of Checking Your Retirement Savings

January 15, 2020 by Nancy

This post is part of the 2020 The Clarity Project, a yearlong series of challenges to get organized and simplified with money. Read about the project at this introductory post here.

This Week’s SAVE Challenge: Check your retirement savings and your contribution rate. Bonus: increase your contribution by one percent (or more!). Here are the 5W1H (the 5 Ws and the 1 H) to explain about retirement savings, for people of any age.

WHY should you check your retirement savings?

We all know we should do things that are good for our future selves.

Future you will thank you for doing the right things when you are younger: eating right, exercising, focusing on healthy relationships, developing good work habits. For many of those areas, you have to do or make decisions every day to practice those good habits.

Future you will also thank you—most definitely—for having set aside money so that when you are older, you have options and freedom.

The great thing about saving early and automating the process is that you do not have to focus on it every day, or use willpower to force yourself to save. Once you set it up, the savings will automatically happen, and the money will make more money for you (thanks to the magic of compound interest).

Checking your retirement savings accounts this week is a great way to see where you stand right now, and how much you are currently contributing to your retirement savings, and bump that number up if you can.

WHO should have retirement savings?

Nearly everyone is eligible to put money into some kind of retirement savings, usually (but no always) if you have income.

If you’re older, you should definitely have–and be checking–your retirement savings regularly.

But if you’re young—and I mean as young as a teenager with an after-school job young—you still should have retirement savings.

Even if you don’t have income (in certain circumstances), you can still contribute to your retirement savings.

For instance, if you’re a stay at home mom (or dad), the income of the spouse who works outside the home can be used to save for the stay-at-home parent.

WHAT are some types of retirement savings?

There are many, many different ways for someone to save for retirement. I won’t cover all the ways, but I can share the main ones, some ideas, and offer some resources for further reading.

Employer-sponsored plans

If you have a W-2 job, meaning you work for someone else or a business, school, or non-profit, or the government, you likely have a 401(k), 403(b), or other savings or opportunities.

Taking advantage of this is a no-brainer, especially if the employer offers a match. That means if you put in $100 in your 401(k) or other account, your employer will “match” that amount up to a certain percentage of your income. This is a guaranteed 100 percent return on your money. Set aside money for retirement here first.

Self-employed plans

If you are self-employed, there are a lot of different options.

If you are young and your income is not too high, you should strongly consider a Roth IRA. I have encouraged all my kids open Roth IRAs, as it allows them to put aside money now, when they owe little to no taxes, and the money will grow tax-free forever.

With the power of compound interest, you can easily save for the far-away future in a way that will benefit you much more than the amount you are saving right now.

For further reading: Nerd Wallet has a great guide to saving for retirement. Here is the section on different types of accounts.

WHEN should you check (or start) your retirement savings?

This week, take a few minutes to log into your retirement account at your employer. If you do not know how or do not have the login, find out how to do so this week. Then, keep your login handy (and secure!). A bonus here would be setting up two-factor authentication or similar security for the account(s).

As you will hear from me a lot this year, it is never too early (or late!) to start saving.

This goes double for retirement savings, and triple for the retirement savings vehicle of a Roth IRA.

WHERE should you have your retirement savings?

If your employer offers a 401(k) or similar account, much of your retirement savings will “live” there. But many people will benefit from a separate account for retirement. This can be helpful for such things as Roth IRAs or prior employer “rollovers.”

If you do not yet have any retirement savings accounts, this mission may take longer than the five minutes. But it is 100 percent worthwhile. Start with your employer and see if you can be part of this benefit.

Some people may have one without knowing it, since many employers have adopted an “opt-out” model for retirement accounts. That means that employees are automatically enrolled in the company 401(k) and some percentage diverted there (along with a match, if offered). This is an improvement from the prior “opt-in” model, in which employees have to actively sign up to participate.

If you are self-employed, or if your employer doesn’t offer retirement savings, explore opening up your own IRA (ideally a Roth IRA!!!) at a low-cost online brokerage. It’s easier than you think.

I have accounts (of varying sorts at three of the major low-cost brokerages: Vanguard, Schwab, and Fidelity. I find them all pretty easy to navigate and work with for questions or rollovers (for example, from previous employers).

If you are opening a Roth IRA for a minor child, the process is a little more complicated. That’s because the account will have to be under your brokerage account. I will explain more about how to do that later in the year.

HOW should you keep track of your retirement savings?

I wrote about tracking your net worth here. As I talk about, using a free online software like Personal Capital can be worthwhile.

You can also put together a simple spreadsheet. I talk about that in my net worth post here, but to briefly recap:

Your net worth calculator should have two sections: assets & liabilities. Your net worth equals assets minus liabilities.

Assets include anything of value that you would like to include:

*retirement accounts

*value of house or car(s)

*any other savings accounts

Liabilities include any debts you owe:

*mortgages or car payments

*student loans

*personal loans

*credit card debt or other debt

Now subtract your liabilities from your assets, and the result is your net worth.

It might be negative–this can definitely be the case for young people who have student loan debt. Don’t worry! Just seeing that number change from less negative to positive over time will be a great motivator.

Tracking your retirement savings is a great way to get and keep motivated about your long-term financial goals. It can even inspire you to start saving more intentionally for short-term goals. We’ll dive into short-term goals & savings next week. Stay tuned!

THIS POST MAY CONTAIN AFFILIATE LINKS. PLEASE SEE MY DISCLOSURE FOR MORE INFO.

An Emergency Fund=Priceless

January 8, 2020 by Nancy

This post is part of the 2020 The Clarity Project, a yearlong series of challenges to get organized and simplified with money. Read about the project at this introductory post here.

January’s Clarity Project word theme is SAVE.

This Week’s SAVE Challenge: Get $1,000 (or $1,000 more) into a dedicated, specific emergency fund. Here are the 5W1H (the 5 Ws and the 1 H) to explain about emergency funds.

WHY Should You Have an Emergency Fund?

An emergency fund, or money set aside for unexpected and critical expenses, is a key element of a good money life.

Nearly 40 percent of Americans could not come up easily with $400 to cover an unexpected expense. That is a problem!

This statistic is from an annual survey on economic well-being from the Federal Reserve. It found that in 2018, nearly 40 percent of Americans would not be able to pay for a $400 expense without going into credit card debt or borrowing from friends or family. (This is one of the markers of economic fragility).

You can read the entire survey here.

This may or may not be you, but nearly everyone could use a boost in their emergency fund.

Emergency or large expenses cannot be planned for, but they often happen, and having an account for these can take a lot of pressure off of your money life.

WHEN Should You Create an Emergency Fund?

The best time to plant a tree is 20 years ago; the second best time is today.
-proverb

One of the first suggestions I make to coaching clients is to set up or increase their emergency funds. We talk about ways to free up some money to help that happen, and I also walk them through how to create it as a separate account.

WHO Should Have an Emergency Fund?

I think there’s really not too early of an age to start an emergency fund. And if you have responsibility for yourself or anyone else, you should definitely have an emergency fund. But even those who are young and unencumbered should consider having one.

Even though all of our kids still live and home and have the Mom & Dad safety net, I have talked to each of them about setting aside $1,000 even now in an emergency fund. As they set up their financial lives, a $1,000 emergency fund in place before they begin to set up their own households is a great benefit.

WHERE Should Your Emergency Fund Live?

It is important to keep your emergency fund separate from your other money, especially your regular checking account.

I recommend that clients put emergency fund money in a high-yield savings account (usually from an online-only bank), and to have that account be ONLY for emergency expenses.

One of the best things our family has done in recent years is set up multiple savings accounts for different goals—and one of those is the emergency fund.

What I love most about this is that in the past, we had a savings account for everything—savings for our next vehicle, school tuition, a house project, travel, and emergency fund, among other goals. And I always felt bad to spend the money for, say, summer vacation. That is because somehow, I thought about it as all emergency fund money.

Now, there are many positive about having them all separate. I will share some of those later in the month when I walk you through how we set up our savings accounts and how we fund them.

We use Discover Bank because it’s online and I already have a Discover credit card. It made it very easy to use and has one of the highest interest rates for online banks. Some of my clients use Capital One, or Ally Bank. All of those offer relatively high interest returns.

WHAT is an Emergency Fund for?

An emergency fund is not for birthdays, or Christmas presents, the latest sale at your favorite store, or going out for a friend’s birthday.

An emergency fund is also not for reoccurring large expenses, like annual auto insurance premiums or real estate taxes. Those can, and should, be planned for.

An emergency fund is for true emergencies—like a major car problem; a home repair issue; or travel to visit a sick relative. If you have that money set aside, you do not need to take from regular income, or go into credit card debt.

HOW Much Should I Have in my Emergency Fund?

Many money coaches or writers suggest you have from three to six months spending in an easily accessible emergency fund. To this money coach, it is very individual to each family or person. If you have a stable W-2 job, you could probably stand to have less in your account. If you have variable income, a larger emergency fund is a good idea.

It is important, however, to set an emergency fund goal and work diligently to reach that goal. First goal? $1,000. After that, set another goal that works well in your family, and then work towards achieving that. Having that peace of mind is–as the credit card ad goes– “Priceless.”

Bonus One: Money Mindset Tip

If you are saving to add something to an emergency fund, especially if you do not have one yet, tell yourself:

I can have this, but not yet.
-Money Mindset

Delayed gratification is one of the most important tools you can have in your money toolbox.

You may decide that you want to cut out a particular expense, like eating out to lunch once a week—to add money to the emergency fund. Remind yourself that it doesn’t mean you will never eat out again for lunch in your life. You can eat out again—just not yet, or right now.

An easy way to stick with this money mindset is the keep a “purchase wants” list.

I have mine as a a specific note on Google Keep, and have found it invaluable in cutting down on non-essential spending. Just writing down the name or description of the item can have a similar effect to buying it, and I often find that later I look back and think, “Why again did I want to buy this item?” The list also allows me to go back later and find ideas for Christmas and other presents, or purchases I actually need but want to delay.

Bonus Two: Extra Credit Reading

Ever challenge, I will provide some extra reading for further learning and ideas.

Clarus Money Coaching: Five Ways that Tidying Up with Marie Kondo is a Lot Like Money Coaching

This is not exactly related to an emergency fund, but does share an article I wrote about a year ago.

Remember how Marie Kondo’s Netflix show caused a stir and had people cleaning out their spaces and filling up local Goodwills? I talk in this article how Kondo-ing is a lot like money coaching.

Dave Ramsey: Four Quick Ways to Build Your Emergency Fund

I have mixed feelings about Dave Ramsey. On the one hand, I acknowledge he has helped thousands of people get organized with their money. But I do not fully agree with some of his advice beyond “the basics.” (say, beyond babystep #3)

Discover: Four Places to Keep Your Emergency Fund

Later this month, I will talk all about high-yield savings accounts, but this is an interesting. I actually really like the idea of using a Roth IRA as an emergency fund, but I know it’s controversial. And if someone does not have

NerdWallet: Emergency Fund: What it is and Why It Matters

Best take-away from this article: keep your emergency fund SEPARATE from other spending. A dedicated savings account ONLY for emergencies is critical. And then if you have savings for other goals (travel, etc.)

J. Money: Be Proud of Your Emergency Fund!

Whether you have a lot or a little, it’s worth being pleased with any steps that you take related to your emergency fund.

THIS POST MAY CONTAIN AFFILIATE LINKS. PLEASE SEE MY DISCLOSURE FOR MORE INFO.

WHAT is a savings rate, and what should you include in it?

*is income before taxes or after taxes?

*does savings rate include the match that your employer contributes to your retirement plan at work?

*does it include the principal reduction in your mortgage or student loans over the course of the year?

Why is a savings rate important, and why should you know yours?

How often should you calculate your savings rate?

WHERE should you (save money)?

Roth IRA

Work Retirement accounts

Taxable accounts

How to calculate your savings rate.

Your challenge: Open up at least one “money fund” and automate savings to the account(s) weekly or monthly.

What are “money funds” and what kind should you have?

Emergency Fund:

Charity:

Travel:

Education:

House:

Auto:

Christmas & Birthdays:

Why should you open multiple money funds?

Who should open multiple money funds?

Where should you have your money funds?

How to open multiple money funds

Discover

Capital One

Ally

This Week’s SAVE Challenge: Check your retirement savings and your contribution rate. Bonus: increase your contribution by one percent (or more!). Here are the 5W1H (the 5 Ws and the 1 H) to explain about retirement savings, for people of any age.

WHY should you check your retirement savings?

WHO should have retirement savings?

WHAT are some types of retirement savings?

Employer-sponsored plans

Self-employed plans

WHEN should you check (or start) your retirement savings?

WHERE should you have your retirement savings?

HOW should you keep track of your retirement savings?

Join 2020: The Clarity Project

January’s Clarity Project word theme is SAVE.

This Week’s SAVE Challenge: Get $1,000 (or $1,000 more) into a dedicated, specific emergency fund. Here are the 5W1H (the 5 Ws and the 1 H) to explain about emergency funds.

WHY Should You Have an Emergency Fund?

WHEN Should You Create an Emergency Fund?

WHO Should Have an Emergency Fund?

WHERE Should Your Emergency Fund Live?

WHAT is an Emergency Fund for?

HOW Much Should I Have in my Emergency Fund?

Bonus One: Money Mindset Tip

Bonus Two: Extra Credit Reading

Join 2020: The Clarity Project