Dear Kim,
My spouse and I are both 32, and we just finished paying off our student loans. We finally have some breathing room in our budget. Everyone says we should be investing, but we don’t know where to start. Should we focus on retirement, saving for a house, or building up savings first? We feel like we’re behind and don’t want to mess this up.
Sincerely,
Getting it Right
Dear Getting it Right,
First, congratulations on paying off your student loans. That is a millstone you can be proud to be done with.
As to saving, the short answer is, “Yes.” You should put something aside in all those buckets. Identify what you can afford to save each month and at first, put the most in your emergency fund. Add a smaller amount to the other buckets, and once you get your emergency fund built up, move more into the other buckets. That give and take will happen throughout your life as your needs evolve.
At some point, you may begin saving for children’s education and have to take some from other areas. Of course, as your pay increases or when you receive bonuses, some of that can be added to various savings accounts. I do find it helpful to separate funds out into different accounts depending on their ultimate destination. If you have not begun to save for retirement, please look at that soon. The longer you have for those funds to grow, the better it will be.
Saving can be difficult at times, and I tell clients that it is ok if is somewhat hard, but remember you need to live today as well. Not necessarily to buy things, but to have experiences with each other and those you love. I have found with myself and my clients that those expenditures bring much more joy than buying stuff. All this is about balance, and I wish you the best finding yours. If there is ever anything I can do to assist you, please let me know.
Best of luck.
Kim
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