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January 5, 2013

To a financially fit new year

Saving at all ages key to lifetime of security


Manchester said no amount is too small to begin saving — $25 a month will add up.

McReynolds and Manchester both advised that people start with a savings account. When a comfortable cushion has been accumulated, then it is time to consider investing.

“We have a worksheet and we look at the last six to eight months of bills,” Manchester said. 

Many investors suggest people save enough money to cover four to six months of regular expenses.

One of the more difficult scenarios for saving money is the multi-generational families. They have to provide for their parents and their children, and putting money aside may seem almost selfish in tight economic times.

There are ways to balance even a tight budget and still save for emergencies.

Many companies offer matched retirement plans. That part of the paycheck is inaccessible, and therefore not considered when budgeting. 

“If your company provides you with a 401(k) or IRA, get the maximum amount matched,” Manchester said. “It is free money.”

Individuals who are not provided with a retirement plan can request a bank automatically take a monthly sum from a checking account and move it to a savings account.

“Pay yourself first,” McReynolds said.

Families saving for college should look into New York’s 529 plan. Money saved in this plan is tax deferred.

“Instead of the grandparents buying a sweatshirt, think about contributing to the 529 plan,” Manchester said.

Many grandparents are living on a fixed income. If they have investments, they must consider how best to manage them. There are capital gains taxes if stocks must be sold for income.

“When we look at planning for the retiree, we are talking about income needs and budgets,” Manchester said. “Lifestyles do not change. Often, older people who come in will want to make sure they do not outlive their money.”

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