It is important that we all take saving for our future seriously as it can help us to become financially secure in the long run. Because personal finances are rarely talked about, I understand that it can be very confusing on where and how to start. In this post I will be sharing 3 types of savings that I think can allow you to have a bright future and some sort of security. I am not a financial advisor but these are my opinions.
Emergency Savings
It is so important to have an emergency savings because life is unpredictable. You could have a job today and be laid off tomorrow or be fined with a hefty medical bill that is not in your insurance coverage, which can destroy your finances. Having an emergency savings is beneficial for unexpected bills/rainy days as it will allow you the freedom to handle some financial situations without going into debt. It is recommended to have at least 3 - 6 months worth of living expenses saved (I would advise to keep saving as much as you possibly can). Your emergency savings should be accessible but shouldn't be touched unless for the obvious reason of an unexpected expense. By putting however much you can afford monthly, weekly or daily towards your emergency savings is a great start to build security.
Long Term Savings
Having a long term savings is ideal for savings over a long period of time (5-10 years or more). This is perfect for saving towards a home, college/university tuition and other things for the future. For this I would recommend saving in a compound interest savings account. By saving in a compound interest savings it will allow your money to grow where you would earn interest on your interest and also the amount of money you've contributed. The earlier you start saving the more money you would accumulate. Examples of compound saving are Mutual Funds, Certificate of Deposit (CD) and Bonds just to name a few. Start compounding today.
Retirement Savings
A retirement savings is so important as it will allow you to be able to finance your needs later on in the future. The earlier you start saving for retirement the more money you will accumulate. For this instead of saving in a standard savings account I would recommend joining your company's pension plan if one is available to you. A pension is basically a retirement plan where you (the employee) would contribute into a fund and your employer would also contribute a percentage of your salary into that same fund. That's right, free money from your employer. This would also count as compounding because your fund will also be capitalizing on interest making you even more money. I would recommend to match your employer's contribution. Please, if a pension plan is available to you take advantage of it. On top of receiving free money, you will not have access to this account which is great as you wont be able to dip into it. This fund is controlled by your employer and you should receive statements periodically. If you don't have access to a pension plan you can also consider doing a 401K or any savings plan where your money wouldn't be taxed.
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