LIMA — With so many potential life expenses — student loans, car payments, rent or mortgage, insurances, healthcare, utilities, phone and cable, childcare, gas and more — it’s not always easy to put away money into savings.
But a little bit saved today can translate into a lot more down the road. The key is to start sooner rather than later.
“It actually helps, even when your children are younger, to get them in the habit of saving,” said Brian W. Wentling, co-owner of Rockhold Wentling Financial Advisors in Lima. “Saving is like healthy eating habits — the younger you can start them, the better. And I do think saving is just as much a habit as it is anything else.”
It’s probably no surprise, then, that the hardest part of saving money for many people can be just getting into the routine in the first place.
“Just like an exercise routine or a diet, the hardest part is getting started for that first year or two, or three,” Wentling said.
Planning and following a budget can make a world of difference, and savings should definitely be figured into the weekly or monthly household budget, Wentling said. In other words, it’s just as important to remember to pay yourself along with the rest of your bills.
“It’s really about having a budget,” Wentling said. “How much you spend on gas, how much you spend on entertainment, how much you’re going to spend on clothing. I mean, the better you budget from week to week, the better you can budget your savings.”
Setting savings goals is another key component for success, Wentling said.
“Whether you’re saving for your first car, your first house, your retirement, people that set goals, or establish goals, written or otherwise, definitely have a higher changes of meeting those goals,” he said.
Starting a mutual fund account is good place to start putting away money on a regular basis, said Lynn Metzger, owner of Metzger Financial Services in Lima. In many cases, mutual fund plans can start out as low as $50 per month.
“For close to 90 percent in the Lima area, that’s the best way for them to invest and start to get into either the equities, or bonds,” Metzger said. “Once the person gets into the swing of doing that, it continues to happen. And they get used to that money going into that and not using it for something else. That’s a good way to build things up.”
Tax season can be an ideal time to begin a mutual fund, Metzger noted, as many companies require a larger first deposit. Large tax returns can make this easier to get started with a mutual fund, and then to continue doing it on a consistent basis.
“Once they do it, then a couple years into it, the comment was, ‘I wish we would have started five years sooner.’ But from that standpoint, it’s never too late to get started.”
During consultations, financial advisers at Metzger Financial Services also speak with clients about potential lifestyle changes that can free up money for savings.
“I believe all of us could probably come up with a couple of lifestyle changes that would save $50 a month,” Metzger said. “Whether that be a less fancy coffee, or maybe they don’t need that one clothes purchase a month that they make. Or, something like that. Again, it’s an individual thing on change their lifestyle just a little bit.”
Paying with cash instead of swiping a credit card can also make a significant difference in spending habits, and ultimately in saving habits, Metzger explained. Watching money physically leave your wallet can help a person avoid impulse spending.
“If you’re standing and looking at that product with your billfold and the cash inside of it, it’s a lot easier to say no in many cases, than it is pulling out the credit card and swiping it,” he said.
Frequent credit card use can also draw consumers into another potentially dangerous money trap: The convenient, yet money-sucking minimum monthly payments.
“The biggest trap they get into is making minimum payments on a balance that has a ridiculously high interest rate,” Metzger said. “Making cash payments would be a better alternative than piling up credit card debt.”
All in all, the golden rule of saving money seems to be this: Start early, even if you think it doesn’t make a big difference. Because the truth is, it can.
“Saving a little bit early in life in your 20s helps immensely when you get into your 50s and 60s,” Wentling said. “Saving a little bit, month by month, in the early years make a huge difference. … Because they think, ‘Well, it’s only $500, or it’s only $1,000. It’ll never amount to anything.’ But $1,000 at 21, what’s that going to be worth when someone turns 65, at 9 percent, or 7-and-a-half percent? All of a sudden, it’s real money.”