What's the Best Method for Organizing Your Saving Activities? Virtually all financial analysts agree that it is best to: Start saving early. Save regularly. shift to another savings goal and a higher-yielding investment when you achieve a particular savings goal. Sometimes the most difficult question is, "How do I get started and how do I maintain my momentum?" One of the easiest answers is, "Save regularly and pay yourself first." What do you think it means to pay yourself first? It means making your saving activities your first priority by paying yourself, or making contributions to your savings accounts you pay any other obligations. after One way before self first is to: Make your savings contribution only if you have something left over after you pay all of your other bills. Have your savings contribution automatically withheld from your paycheck and directly deposited into your savings account. The advantage of this saving strategy is that it: Ensures that funds will be saved if any remain after all other bills are paid and any impulse purchases are made Ensures that funds will be saved-as opposed to saving only if sufficient funds remain after all other bills are paid and any impulse purchases are made Therefore, paying yourself first imposes on the act of saving. financial discipline financial impulsiveness It is recommended that one of the first goals of a savings program should be the accumulation of an emergency fund equal to three to six months' worth of living expenses. Let's examine this savings objective further. What is the purpose of an emergency living expense savings fund, and what other sources of funds are sometimes used to address these needs? This fund allows you to cover a household's: Living expenses in the event of a job layoff, illness, injury, or the premature death of an income-generating member of the household Expenses incurred during vacations, holidays, and birthday celebrations O However, most people don't maintain an emergency living expense savings fund; instead, they expect to rely on their credit cards to pay their living expenses during these expensive and stressful events. The downside, or negative consequences, of this strategy is that it their wealth since it involves the payment, rather than the receiving, of reduces increases What type of savings vehicles should be used to store your funds? Select the relevant factors that should be considered when identifying appropriate savings vehicles. Check all that apply. The level of past interest rates The liquidity, convenience and safety characteristics of the account being considered The length of time you can leave your money on deposit In general, if you expect interest rates to decrease in the near future, then you should invest in investments so that you can Lock in the higher interest rates before they decrease. Reinvest quickly when interest rates increase. O
