The real goals you should save for, instead of retirement

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Planning for your retirement seems like the one thing that everyone recommends, and everyone you know seems to be doing. It’s not bad advice; it’s a really good thing to do in order to protect yourself in the future. However sometimes, planning too far in advance can jeopardize what is going on in the here and now. Putting away money for your retirement is a very important and worthwhile thing to do, but if you have any of the following issues, maybe you should take a break from your retirement fund in favor of your day to day life.

Emergency savings

It’s super important to have funds in your emergency savings account. This way, if an unexpected event comes your way, like a repair, or if you suddenly find yourself out of work, you don’t become massively out of pocket. Some financial experts recommend aiming to have around six months worth of expenses in your emergency savings account. You can set up an automatic transfer into your savings account, in the same way you do for your retirement funds. It’s a good idea to aim to put about 10-15% of your monthly income away like this.

Debt

Paying off debt should always be a priority, especially if the interest rates are over 9%. When you are only making the minimum payments on your debts, the interest is continuing to grow, and you are prolonging the process of paying it off and how much it will cost you in the long run. If the rate of interest on your debt is more than what is being made in your retirement portfolio (which tends to be 6-8% on average), it doesn’t make sense financially to continue to juggle paying the two. Concentrate on getting rid of your debt first, before you start saving for retirement!

Buying a house

Owning a home is probably a goal that the majority of us are aiming for, but we all need to face up to the fact that it quite literally costs a fortune. You’ll need at least 20% of the cost of the home you are planning to buy available to you, to cover the deposit that you will need to secure yourself a mortgage. And that’s not including the price of estate agents and having a little backup money because let’s face it, something unexpected is bound to happen or break during the moving process. If you know you’ll be buying a house in the next couple of years, that should be your saving priority.

Having children

It takes a village to raise a child, and it sometimes feels like it takes a villages worth of money too. There are numerous studies about the cost of children, and that’s not including the money that some people may need pay before the birth for things like fertility treatments or the costs of adoption. The best way to get ready for a child is to save as much as possible before saving for retirement. Whenever you can, you should put money aside for your retirement but take into account the important exceptions mentioned here so you can use your money in the way that makes the most financial sense for you.

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