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How the average person can save money quickly and easily

Vital Signs of Financial Good Health

fh-1When we go to a medical doctor, there are a few things that are almost guaranteed. A fairly long stay in the waiting room, a check with a thermometer, stethoscope and blood pressure cuff. Except for the time in the waiting room, these are instruments to measure your vital signs, which are the physician’s rudimentary road map to your overall health. Financial good health also has vital signs.

As it turns out when it comes to money matters, financial good health isn’t that much different from the physical signs.

Credit Score = Thermometer, Except in Reverse: The higher your FICO, the healthier you are for right now. If your credit score is low, you are financially ill. But you don’t have to stay that way. Take the necessary steps (a credit card that you pay off every month. Responsible use of the credit you have, etc.) to raise the score.

Know that your personal finance temperature will improve with time, as long as you behave. It doesn’t take a million dollars from Uncle Louie to improve your score. Be both patient and prudent and your temperature will soon be 98.6 degrees. That is unless Uncle Luis has a bundle of cash for you to receive. Then if it’s enough your FICO score isn’t that important anyway.

Retirement Savings = Heartbeat: Getting Money Smart believes that you are going to live to a ripe old age. The only sure way for that to happen is if your heart is healthy for the long haul to great-great grandchildren. There is no single, correct dollar amount to put aside for retirement, which is why most projections rely on percentages. The most important one is how much of your salary you should put aside for retirement, which experts peg at 15 percent.

But don’t panic. Just get used to the idea of regularly saving. If five or six percent is all you can do this month, start there. 15% is a target. Eventually, you will make it. Don’t forget about company matching funds. You may be able to save more than 20% with the match.

Emergency Savings = Blood Pressure, Except in Reverse: The use of a blood pressure cufffh-2 is the quickest way to tell if you are in a crisis hidden from the naked eye. Speaking of crises, how long could you survive on your emergency savings? There is no need to be embarrassed. According to a recent study, the median answer that 1,172 Americans gave when surveyed was “17 days.”

Experts tell us that a couple without children should have six months’ income stashed away in a fund NOT earmarked for retirement. A family of four should have 12 months income put aside. Chances are your blood pressure is too high.

Financial good health involves a nutrition pyramid of planning. About 50% of your income should go towards fixed expenses like rent and utilities, 20% for financial goals like savings and investing and 30% for day-to-day expenses like groceries and gas. Everyone’s fitness could use some fine tuning unless you’ve got that rich uncle.


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