The Savings Hierarchy: How To Prioritize Your Savings
22
The Savings Hierarchy How to prioritize your savings goals Saving money is like building a house. You must build from the ground up to create a solid foundation that lasts for years
-
Upload
wela -
Category
Economy & Finance
-
view
604 -
download
0
Transcript of The Savings Hierarchy: How To Prioritize Your Savings
The Savings Hierarchy
How t o p r i o r i t i z e you r s av i ng s goa l s
S a v i n g m o n e y i s l i k e b u i l d i n g a h o u s e . Y o u
m u s t b u i l d f r o m t h e g r o u n d u p t o c r e a t e a
s o l i d f o u n d a t i o n t h a t l a s t s f o r y e a r s
Get Cash flow positive +
More coming in than there is going out
1
Prioritizing Your SavingsBy
www.GetWela.com
You can’t save if you’re spending all
your money
Sure, th is seems obvious. But the savings h ierarchy can’t be bui l t unt i l
you’re cash f low posit ive .
Pay Off Debt
Get rid of those “bad” debts
2
Prioritizing Your SavingsBy
www.GetWela.com
I t may not seem l ike saving but i t i s .To reap the rewards of th is step don’t cont inue racking up debt whi le you’re
working on i t .
What are some bad debts?
Credit cards
Student loans
Cars
W
www.GetWela.com
Build Your Emergency Reserve
3-6 months of living expenses
3
Prioritizing Your SavingsBy
www.GetWela.com
-Forbes2016 s t udy b y bank ra t e . c om
63% of Americans don’t have
enough savings to cover a $500
emergency“
This is money that should be used only in emergencies l ike your car
breaking down, unexpected b i l ls , or los ing your job.
Rules of emergency reserves:
Should be cash
Should be eas i ly access ib le
Should be ref i l led when dipped into
W
www.GetWela.com
Short-term Cash
Expenses coming due in 1-3 years
4
Prioritizing Your SavingsBy
www.GetWela.com
These monies should be invested in very safe investments
Short-term examples
Engagement Ring New Home Family Vacation
W
www.GetWela.com
Match Your 401k
Max out your company match
5
Prioritizing Your SavingsBy
www.GetWela.com
Free money people.
Free. Money.
I f your company offers a 401k, increase your 401k contr ibut ion to be
at least as much as your company is offer ing to match.
Max Out Your Roth
Fully fund a Roth IRA
6
Prioritizing Your SavingsBy
www.GetWela.com
If you’re able to contribute to a Roth IRA max it out!
C o n t r i b u t i o n s m i g h t b e l i m i t e d i f y o u r c o m p e n s a t i o n
e x c e e d s a c e r t a i n l e v e l
I f y o u ’ r e u n d e r 5 0 , c o n t r i b u t i o n s c a n n o t e x c e e d
$ 5 , 5 0 0 / y e a r
I f y o u ’ r e o v e r 5 0 , c o n t r i b u t i o n s c a n n o t e x c e e d $ 6 , 5 0 0
M o n e y t h a t g o e s i n t o a R o t h i s a f t e r t a x a n d c o m e s o u t
t a x f r e e ( w h o o p w h o o p ! )
Rules of the Roth
W
Max Out Your 401k
Fully fund your 401k
7
Prioritizing Your SavingsBy
www.GetWela.com
Remember that free money account? You can usually put more than the match amount into the 401k
I f y o u ’ r e u n d e r 5 0 , c o n t r i b u t i o n s c a n n o t e x c e e d $ 1 8 , 0 0 0 / y r
I f y o u ’ r e o v e r 5 0 , c o n t r i b u t i o n s c a n n o t e x c e e d $ 2 4 , 0 0 0
W
www.GetWela.com
Put money into a brokerage account
Taxable investments
8
Prioritizing Your SavingsBy
www.GetWela.com
A brokerage account is just an investment account. No tax benefits but still useful in the hierarchy
N o m a x i m u m o n i n v e s t m e n t s
A l l o w s y o u t o i n v e s t i n a n y t y p e o f
i n v e s t m e n t s u c h a s a s t o c k o r a b o n d
W
www.GetWela.com
That’s why thousands of people are managing their full
financial picture on the Wela platform
Wela leverages technology to give financial advice with a
human touch.
