Stale Green Light

The holidays are in full swing and that means that a lot of cash is being thrown down on presents, food, and travel costs.  The expenses add up really fast, and before you know it your savings account is drained in only two months time.

It is stressful and you wonder how you will recover and prepare for the next big things on the calendar; like tuition, summer plans, and and everything else that is just around the bend.  Well that is what New Years resolutions are for.

Make the commitment to cut back on spending and put your money away in a safe place every paycheck.   The expenses will slow down after the new year, and there should be no reason why you can’t build back up your savings in a few short months.

You just have to be safe and smart.  Take it day by day, and try to resist those little splurges while you are out running errands.

You probably don’t need those new shoes, and your can kids definitely wait for that $50 video game.  Christmas was the time for those things, but after the holidays pass you need to buckle down and look towards the future.

Budget your money wisely and try to put as much as you can into the bank every month.  If you can, put a large chunk into an interest bearing savings account so you are making money while doing nothing.

If you plan and take control, you can build your savings back up and get back to happy place where you are not completely stressed out about money.

Though some parents are against saving money for their kids to use as adults for thing like college, many parents are avid about putting away a few dollars every month.  The college fund is a smart choice, especially for parents who want to make sure their kids can go to college.

Though there is always talk about scholarships being everywhere, the truth is, they are pretty hard to come by unless you are extremely athletic, a genius, or are blessed with having a minority bloodline.  If your kid is an average, Caucasian, without any super-talents, they may have trouble finding a scholarship.

Oftentimes, kids who want to go to college simply cannot afford it, and it breaks many parents’ hearts to see their kid not get an education.  If you want to avoid experiencing the devastation of not seeing your child go to college and continue their education so they can be a doctor-start a college fund, and start it early.

The smartest choice is to start the fund when you find out you are pregnant.  Though doctor bills may seem expensive at this time, it is probably the most money you will have in a long time, so start saving while you have money to save.

Once the child is born, the expenses of clothes, diapers, food, and everything else will only add up and leave you with less and less cash to spare.  Start a college fund early and commit to putting a certain amount in it every month.

This will gain interest and hopefully be enough to pay for the undergraduate.  If you have some leftovers when your kid is all grown up and graduated, take that money (which is still gaining compounding interest) a buy a car or go on vacation.

After all those years of raising a supporting your child, you deserve a treat!

You can put your money into either a Traditional or Roth IRA for retirement.  A Traditional IRA has deferred taxes, which means you pay taxes on the entire amount when you access the money upon retirement.

A Roth IRA is where you pay taxes as you go along and you don’t have to pay taxes when you access the money upon retirement.  If you think taxes are higher now then they will be in the future than get a Traditional IRA, but if you taxes are only going to get higher then a Roth IRA is the better option.

When you invest in an IRA, there are many different investment vehicles that you can choose from.  You can put your money into CD’s or money market accounts, or you can gamble a little by putting them into stocks, bonds, mutual funds, or indexed funds.

CD’s and money markets are no risk investment plans, but with little risk comes little rewards.   Stocks, bonds, and funds give you the opportunity to make big returns; but you can also lose a lot as well.

For a semi-conservative plan, future retirees should put about half of their retirement money into CD’s and money markets, while investing the other have in index and mutual funds.

For the funds, however, make sure that you choose a diversified portfolio to give you more opportunities in the market.  A diversified portfolio also acts as a safety net so that you don’t lose all of your money if the market dips.

In a diversified portfolio when one company dips, another may surge.  This ensures a certain amount of returns, even when you suffer a loss.