Finance by Kim Fernández

¡Bienvenidos a Febrero! This month we celebrate a number of holidays. Among them are Día del Amor y la Amistad and Miércoles de Ceniza; two important days to think about those we love and what is most important in our lives. How do you take care of those you love financially? Are you the type that overspends on fiestas and later regrets it? If you spend and never commit to saving, you may find you have too little for retirement when it’s finally time. Here are some tips for saving every day.

1.- Write your savings goals down. Your goals might include: paying off a debt, buying a car, paying for college or retirement. Then prioritize your goals into three categories: Short-term (under 5 years), Intermediate (5 to 15 years) and Long-term (over 15 years).
2.- How much of your income should you save? Many experts suggest as high as 15% of your income. If you have debt, first pay these off. At the same time, try to set aside an amount to start an emergency fund. An emergency fund may keep you from falling back into debt.
3.- Although it can vary, the general consensus for the size of your emergency fund is 3 to 6 months of expenses. Paying off debt and building an emergency fund should be in your short-term goals.
4.- Paying for college, a quinceañera, wedding or house down-payment may be intermediate goals to save for. Once debts are paid for, you can transfer those payments to saving for your goals.
5.- Long-term goals typically include retirement. The sooner you can start saving for retirement the better, as growth compounding over time can make a significant difference in the final amount.

Remember, these “Rules of Thumb” may help you get started on the “Road to Saving” but may not apply to everyone. One way to know for sure is to talk to your advisor and complete a financial plan.

This article is meant to be general in nature and should not be construed as financial advice related to your personal situation. Waddell & Reed does not provide legal or tax advice. Please consult a professional prior to making financial decisions. Investing involves risk and the potential to lose principal. Systematic investment plans do not ensure a profit nor guarantee against a loss in declining markets.

Kim Fernández is a Financial Advisor with Waddell & Reed and can be reached at 520.745.3090 x116 or by email at kfernandez@wradvisors.com for assistance. Waddell & Reed, Inc. Member SIPC