Home

Savings Accounts - 401Ks

There are many ways to save money but the most important point is that you do SAVE! Putting money aside is a form of paying yourself and you are the most important person to pay. Some ideas about savings:

  • The more you can save the better but it is even more important to begin saving today, if you have not already started saving.
  • You can open a savings account or money market account at you bank. Interest rates today are low and you will not be paid much interest.
  • If you are working and will get a W-2, you can open a regular IRA account and but aside $5,000 annually (max. 2009). (What is an IRA?) An IRA is a savings account that the government allows you to set up at a bank, brokerage house, mutual fund etc... The money stays in the account until you are 59 when you can begin taking the funds out. Your money grows tax free while it is in the account and the year that you put money in the account your taxes will be reduced by the amount you put in. When you take it out at retirement, it is taxable. Be sure to see your accountant or money manager for the details. But the important thing to do is put money aside and an IRA is an excellent vehicle.
  • Roth IRA is even better. It allows you to take your money out without paying any taxes. You do not get a deduction in the year you put money in.
  • 401 Ks. This is the savings plan that many companies offer and if your company offers this plan you need to sign up for it. It is the simplest way to have money put aside for you. It is deducted from your salary and goes directly into the plan. You are allowed to put much more in this plan (2009 -$15,000+). Also, many companies match some of the money you put in and this is basically free money.

Many options to save – but save you must. Some day you will want to retire, your IRAs and 401 Ks will help you retire with comfort. Cash is important for your unexpected expenses which you will have. And when you want to buy a house, condo another car, you will need a down payment even if you plan to finance the purchase.