Three Reasons to NOT Save for Retirement

Most people are vastly under saving, but no matter where you are at with your retirement investments, it never really will hurt to save more. Life is spontaneous and will sometimes throw you in different directions, so there will likely be times when it is more important to allocate your money to other important costs rather than saving for your retirement. Here is a list of three reasons that you may NOT want to save for retirement at the time:

Silver CascadeCredit Card Debt

If you are in a significant amount of credit card debt it is probably a good idea to put a hold on your retirement investments. High interest rates on your credit card debt puts a drain on your finances and unless your investments are making more in interest than you are paying on your debts you are effectively losing money. It’s important to pay off, or at least minimize your credit card debt as a priority over retirement savings.

Have an Emergency Fund

Life can always go differently than you expect it to. By having an emergency fund you will be able to protect yourself financially if you suddenly lose your job or encounter any unexpected medical costs. It’s a good idea to have at least 6 months of living expenses saved up. Once your emergency fund is stocked you should then allocate those funds to your retirement savings.

Student Loans

If you are young, you likely have significant student loans. While you might think that it makes the most sense to direct some money to retirement investments and some to your loans. But if the interest rates on your loans are higher than the interest that you accumulate on your retirement investment, you are losing money. It’s wiser to pay off your debt as quickly as possible and then invest in your retirement.

An exception to this, however, is a low interest student loan where your interest rates are less than the interest that you make on your retirement investments. If this is the case it’s smart to allocate funds to both.

Retirement investments are important and should always be part of a healthy financial plan, but there will be times in your life where it makes more sense to prioritize other expenses over your retirement plan. If diverting money from your retirement investments can help you with current financial burdens, don’t be afraid to deviate from the plan. Finding a balance is important when allocating money to your expenses and to your savings.

 

When is it better to use a Credit Card?

The average person had credit cards and a debit card and uses the credit card when making big purchases and the debit card to make smaller purchases. Why? What’s the difference? Is it better to use credit cards exclusively? Or, is it better to use debit cards exclusively? When is it really a better idea to use a credit card over a debit card?

imagesCredit Card Points

This is the best reason to use a credit card – points! When you have a credit card that give you points as an initiative to use them usually you will get 1 point for every dollar spent, but, sometimes 2 or 3 depending on the card. Accumulated points can then be used to purchase several different things depending on the card that you have. The downside: Credit cards that offer points advantages generally have higher interest rates and maybe a fee to be a member – remember to pay off your cards to get the most out of its points reward system.

Debit Cards Track Expenses and do not Charge Interest

With a credit card it’s easy to spend excessively, if you have a tight budget this can make it harder to stay on track. If this is the case for you, a debit card is probably a better choice since it takes the money right out of your chequing account, forcing you to keep track of spending.

Another stark difference between credit and debit cards is interest charges. Credit cards charge interest on any accumulated debt on a monthly basis. If you spend excessively on a credit card without paying it off you will incur interest and this may be a substantial amount based n your balance and spending habits. Debit cards on the other hand do not charge interest on purchases since the use your money to make them.

Learning how to use debit and credit cards responsibly is an important skill. If you are someone that cannot use a credit card responsibly then it’s best not to have one, if you frequently pay down credit cards so that interest is not incurred using a points card as much as possible can be beneficial.

How Young is Too Young When it Comes to Planning Your Retirement

You may think that there’s no such age that is too young to begin planning for your golden years. This is partially true.

You will always benefit from saving for your retirement at an early age. Even if you’re in your early 20s and have just officially entered the workforce, it never hurts to put away a small amount of each paycheck with retirement in mind. Or even better, you could start investing in your 20s. This age is also ideal for taking advantage of high-risk, high-return stocks because your 30s, 40s, and 50s will act as a buffer for any lost income.

Make money online

Photo by Ian Britton

However, being a proactive saver is very different from planning your retirement. When should you officially begin planning your retirement? Most financial experts will tell you that your thirties are a good time to start. You’ll most likely spend your twenties getting an education, pursuing a career and maybe even starting a family. By the time you reach your mid-30s, you’ll have many of life’s bigger questions sorted out so that you can at least begin to know how much money you’ll need to retire and which other financial obligations of the present will compete with your desire to save part of your paycheck for it. Factoring in your student debt (if you still have any), a car note and how much you plan to save for your own children’s education is critical in this process.

But your largest financial obligation–and therefore the biggest competitor for money that could be going into retirement savings–will be your home. This should play no small part in your retirement planning because owning your home outright one day could provide you with the financial security that you need when you are no longer working. You can use a mortgage calculator to help you determine at what rate you should pay off your home loan while also saving for retirement.

Also, by the time you reach your 30s, you should definitely have a 401(k) if your employer offers one, or at least an Individual Retirement Account. These savings not only offer the benefit of being tax-exempt but they may also curb your temptation to dip into them for non-retirement purposes because you face a heavy fine for withdrawing the money.

As you enter your 40s, you’ll want to make more firm plans for your financial future, which will include a more tangible savings goal for retirement. You may also want to begin to shift some of your investments from stocks to lower risk bonds, though not all of them have to go this way.

Of course, there’s no magical age at which your retirement planning instinct should kick in. It will vary slightly depending on your financial situation. But even if you aren’t making solid plans, you’re never too young to keep an eye toward the future.

Finding Ways to Increase Your Bottom Line

Savings Ahead SignAs a business owner, you likely have one main objective–to sell your product.  Of course, you want to provide good customer service and to have satisfied clients.  You probably also hope that your employees will enjoy their jobs, do good work, and consider you a reasonable boss.

However, if you’re looking to increase your bottom line, there are several steps you can take:

1.  Raise the price of your product.  As inflation increases, it is reasonable to raise the price of your product.  If it is not a significant increase, most consumers won’t object.  You probably don’t want to do this frequently, but when it is warranted, raising the price is a good way to generate extra income.

2.  Reduce the cost of manufacturing.  Reducing the cost of manufacturing without lowering quality is also a possible option.  Many companies choose to move their manufacturing overseas where labor is cheaper, but business owner Jamey Bennett told USA Today that he moved his manufacturing back to the states because of too many headaches including middle of the night conference calls when his product was manufactured overseas.

3.  Reduce the cost of routine expenses.  People tend to set up their utilities and not think about them again.  The same can be true for your business.  When was the last time you compared rates on phone and Internet service?  Take the time to compare business electricity prices at Make It Cheaper.  You may be surprised that you can find lower rates now compared to what was the best price when you first signed up for service.

4.  Outsource some tasks.  There may also be some tasks that you can outsource that will free up your employees to do more important work that can help your bottom line.  While you don’t want to outsource all tasks, outsourcing some can pad your bottom line because you may be able to pay a lower hourly wage and not have to cover insurance, which can be costly.

There are many ways that business owners can improve their bottom line from increasing the price of their product to reducing manufacturing and everyday expenses.  The key is to keep exploring what options are available to you and to do this yearly.