Savings Action Plan
How much money do you want to save over time?
Identify how much you are saving for, and when you want to reach the goal. Once you determine the amount you want to accumulate, the Rule of 72 may help you estimate the time and interest rate needed to double your savings. Remember, this formula only works with fixed interest rates.
How quickly do you need the funds?
If you have some money that you will not need for several years, you may consider investment options such as stocks, bonds, or mutual funds.
On the other hand, if you think you will need quick access to the money – and you need to be sure the money will be there when you need it – it might be best to keep it in a federally insured savings account or CD.
How risk tolerant are you?
If you are not comfortable with risk and cannot afford to lose the money, consider depositing your money in an insured financial institution. You will need to shop around for the account that best meets your needs.
Pay Yourself First Action Plan
- How much do I want to accumulate over a certain period of time?
- How long can I leave my money invested?
- How do I feel about risking my money?
- What will I do now to save toward my goals?
- What will I do by the end of the month to save toward my goals?
- What will I do by the end of the year to save toward my goals?
Owning a Home
Owning a home is an investment because the house generally increases or appreciates in value. When you home increases in value and your debt decreases as you pay the mortgage, your equity increases.
Equity is the difference between how much the house is worth and how much you owe on the house.
Value of home = $250,000
Minus Debt (how much you owe) = $200,000
Equity = $50,000
Owning a Business
Although starting a business can be risky, if planned and managed correctly, it has the potential to increase your future financial security.
For more information, start by contacting your local Small Business Administration district office for more information on training and counseling programs to help you learn how to start, grow, and success in business. Visit the following website for more information: www.sba.gov.
These options may not be for everyone, and the decision to invest in a home or a business needs to be made very carefully.