NDSU Extension Service - Ramsey County


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Ready, Set, Save

Ready, Set, Save


            Saving is almost always a good idea.  Whether it is long-term saving for retirement, setting up an emergency fund or saving for a vacation, savings is sure to come in handy.   Here are some good guidelines for setting up the best kinds of long term saving strategies.

      - Identify Sources of Income - In order to save, you'll have to have income that's not part of your overall household budget. Find out where that money is going to come from, and figure how much you may be able to save on a regular basis.

-    Determine a "Weekly Minimum" - Using your calculations on your income, try to find a weekly or monthly amount that you can afford to save. If you're approaching savings along with a spouse, talk about how much the two you can set aside for long term savings.

      - Research Matching Funds and 401ks - Some companies offer a 401k account or other matching funds options for savings. Look into this to make sure you're not overlooking any opportunities to add even more to your collective nest egg.  Even if you don't have a 401k, you can still set up an Individual Retirement Accounts.

      - Get a clear picture of your savings goal to improve chance of success. If saving money leaves you feeling deprived, consider your attitude towards savings.  It should make you feel that you have accomplished a goal – not that you are being penalized.

      - Understand the power of compound interest. Setting aside money early on and watching it grow can be a powerful motivator. To envision the potential of compound interest, consider the rule of 72. Take the number 72 and divide it by the projected rate of return you expect to receive each year from an investment. This will reveal the estimated number of years it will take for that amount of money to double.  For example, say you invest $8,000 in a mutual fund with an average return rate of 8 percent. It will take approximately 9 years (72 divided by 8) for that amount to turn into $16,000.

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