Many people in the Boston area economy say saving money is a goal in 2016. The best way to save is to have a plan. Depending on your stage of life, a savings plan requires specific financial responsibilities and actions. While there’s no such thing as a plan that fits everybody’s needs, here are some suggestions.
Saving in the Boston Area Economy
Baby Boomers. If you’re a baby boomer, aged 51-69, you’re in good company. Your generation comprises over 25% of the total population of the U.S. Baby boomers are typically in better shape financially than most other folks. However, like most boomers, you probably don’t have much money in your retirement account. Just 60% of baby boomers report having any money saved for retirement. In addition, most boomers don’t have a retirement pension, leaving them to rely almost solely on Social Security.
The Strategy for Baby Boomers?
• Many baby boomers have gone or are planning to go back to work.
• Consider trying to get by on less by changing your lifestyle. For example, is downsizing your home an option?
• Shift your retirement savings into high gear by saving more, faster.
• Make sure your investments are allocated correctly. Statistics show less than half of all baby boomers are satisfied with theirs.
• Consider long-term care insurance.
Gen Xers. Generation X members, aged 36-50, are in the midst of advancing in their chosen professions and are busy raising children. Some are also caring for elderly parents. Their biggest challenge is managing cash. This age group is facing the most expensive years ever.
The Strategy for Gen Xers?
Pay yourself first. Set aside a certain amount of each paycheck and put it in savings. Then pay the bills, household expenses and other obligations that keep the Boston area economy healthy. Consider “forced savings” whereby your bank or employer automatically drafts an amount to fund a savings or retirement account. Avoid buying a more expensive home than you can afford. Paying on a big mortgage each month isn’t a good idea and will hamper your ability to save.
Millennials. Millennials, aged 19-35, are surprisingly better at managing money than Gen Xers. Perhaps it’s because they are concerned about the job market. Many had a harder time finding a job after college than they anticipated. However, millennials tend to make financial decisions “on the fly” and fail to prioritize long-term needs. Retirement – probably because they view it as being light years away – isn’t on their radar. They are least likely to contribute to their employer’s retirement plan or to open IRAs.
The Strategy for Millennials?
Most millennials rent these days. Managing that cost is most important. Consider living at home a little longer – even after college. Getting rid of student loan debt should be a priority. Consider a loan repayment plan based on your income level. Pay that debt as soon as possible. Be frugal with discretionary income. Set a budget and give yourself a monthly allowance. Failure to do so could result in splurging. Watch your credit score. Since all large purchases will probably depend on a good credit score, make sure you pay your bills on time and not get over-extended in the Boston area economy.
With a little planning and financial discipline you can save money at any age. Get started today. You may be surprised how easy it can be to set aside money for when you may need it the most.