Each Thursday, Ms. Moneypenny posts 5 money-saving tips. If you have a tip you would like me to include, leave me a comment and I'll take a look for a future blog post.
Most of the financial information published by the 'big guys' these days seems to focus on the Baby Boomers. Why? They are rich (or they should be) and they are going to start exiting the workforce in large numbers very soon. Or at least they might. At their current overall rate of savings, maybe not.
But I think that more attention should be paid to the Gen Xers - my generation. Why? Because it's becoming more and more clear that in order to fund healthcare and retirement programs such as Social Security for the Boomers, we're going to be stuck with a big bill in a few years.
Now, I fully support a better healthcare solution for all Americans, rich and poor. I'm willing to pay more taxes for that, even. But where my concerns come in is that I'm not sure that our government over the next few years, while handling the unbalanced budget, the deficit, a rocky economy, a health care crisis, and Boomers retiring in record numbers, is going to have the ability to take into account the implications of their economic decisions on future generations.
Which leads me to think that my generation is going to have to save - and save hard, to make up for this lack of forward-thinking.
So here's 5 things you can do to shore yourself up for the uncertain future:
1. Save now, save as much as you can, save often
I think for our generation, savings is going to be our savings. Save for retirement, save an emergency fund, save save save.
Yes, I know savings is boring. Do it anyway.
2. Get out of, and avoid, consumer debt
Put down the Lexus brochure and back away from that flat screen, my friend. If you haven't saved for it, or you can't pay it off for your savings, the hard reality is you cannot afford it. No, I don't care that everyone you know is going on a blowout vacation and you don't want to be the only party pooper. Learn to swim against the tide, and it will serve you well.
Have some debt from more misspent days? Get up a plan to pay it off. Then use that payment money to build savings.
3. Shop for furniture frugally
Furniture, and furnishing the house, can be a big hit to the budget of those of us who are at an age where we're deep in mortgages, child care payments, and endlessly rising expenses. Never been in a used furniture store? My friend, you are in for a surprise. Sure, there are those kitchen chairs your mom had with the plaid seat cushions there, but the other day I saw this cool hand-painted asian cabinet that would look just fabulous in our dining room in the window of one.
No, I'm not telling you where I saw it. Find your own.
4. Shop for everything frugally
Okay, so this is just a carryover from #3. But think of it this way: Let's say you have about $400 a month that you can afford to put towards a car, and $4000 saved to put down on one. You could buy a luxury car for $35,000.00. Or you could buy a slightly used value car for $16,000.00. Buy the less-expensive car and it's paid off in 30 months, or 2.5 years. Then keep saving that $400, while you drive that car until it's 10 years old (yes, cars can - and do - last that long). At the end of that time, you'll have $36,000.00 to put towards your next car, or two. Meaning this would be the last car you finance - ever. Think about that for a minute. Then do it.
Buy the more expensive car....and it'll take you 77.5 months, or almost 6.5 years to pay it off.
And at year 10, you'll only have $16,800 to put down on the next one. So you'll still have a lengthy payoff window.
This thinking can be carried over into almost every type of purchase.
5. Live 1 paycheck behind
It's almost inevitable that our lifestyle expand somewhat beyond starving student status at some point. Not only will a life lived on ramen noodles most likely put you on high blood pressure medication, I don't know about you, but I don't even like ramen in the best of circumstances. And eventually you may want to trade those milk crates for a real bookcase or two.
But what you can do is expand slower than everyone around you. When you get a 3% raise, put 2% into your 401k, and the remaining 1% after taxes into taxable savings.
What you don't see, you don't miss, and quite frankly, you lived just dandy before you got that raise anyway.
There are many more things you can do to save - but the bottom line for those of us who are behind the Baby Boom is that we need to be prepared to cover our own butts - even through retirement. Think about that now.
You won't regret it.