Tier 1: Savings
The first place someone should invest is in themselves. You should always pay yourself first. Even if you have some debt, pay yourself and then your debtors. It is important that you stay out of debt, but without any savings unexpected expenses will come along and create debt or exasperate debt you already have. Especially if you are working to eliminate credit card debt, and you have cut up all your credit cards. If you don't have any personal savings and your car breaks down you can put yourself in quite the bind. A good amount to shoot for is 3-6 months of your expenses. The following are tips to help you save the way you should:
1. Create a budget (shoot for 50% needs, 30% wants, 20% savings, but everyone is different)
2. Save 10-20% depending on circumstances (i.e. debt & other obligations)
3. Make it automatic (automatic transfers)
4. Treat it like a bill
4. Treat it like a bill
The other question is where to put your savings. Good savings must be liquid, safe and consistent. What ever you do, do not put your savings into a normal savings account. My savings account at Wells Fargo pays .01% each month which means I earn an APR of about .12%. That's nothing. However there are online banks like ING that pay almost CD rates. Right now their savings account is paying an APR of 1.1%. That's almost 10 times Wells Fargo! (Email me @ ben@richestmaninzion.com and I'll give you a link for a $25 bonus with a new account. I will not add your email to any mailing list or share it with anyone). There are other options. I help a lot of my clients set up automatic savings plans that pay 4-5% annually. You can email me if you want more details on that as well.
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