Saving for the Future

Start your journey to financial freedom with these tips from financial planner Stephen Benold

Many people make 3 mistakes when it comes to saving for the future:
1. Not having an emergency fund
2. Saving too little and too late in life
3. Making saving a last priority 

Build an emergency fund

“Before you even think about saving for retirement or college, you must create an emergency fund,” Stephen says.

An emergency fund is a savings account for things not covered by insurance. These may include anything from unexpected medical expenses requiring hospitalization to a broken air conditioner in the middle of summer. 

For a family with one person making money, set aside six months of funds for mandatory expenses. Families with two earners should set aside three months’ worth. 

Start saving right away

A common thought is, ‘I’ll wait until I have a bigger salary or I’ll wait until I have my first home. Then I’ll save,’ ” Stephen says. “That doesn’t work. It is a big mistake to wait until too late in life to start saving. You need to begin saving as soon as you possibly can.” 

For example, Ben and Arthur graduated college at 22 years old and worked in similar paying jobs. Ben saved regularly for 10 years and stopped when he was married, with two kids, and wanted to buy a house. Arthur, on the other hand, bought a new car, lived in a fancy apartment, and spent everything he made. At 32, he began setting aside money every month and will continue until he turns 65. Although Ben saved money for a shorter period of time, he will have more money than Arthur when they reach retirement age. “That’s the power of compounding,” Stephen says.

Save first, not last 

When most people get their paycheck, they spend it on everything they need and only save if anything is left. “That’s a big mistake. Put your savings on autopilot and have those deducted first,” Stephen says, adding that it’s best if your employer has a retirement plan that automatically deducts savings from your paycheck. “If you wait to make it last instead of first, you’ll wind up not saving enough or save none at all.”


Exactly how much should you be saving? “This is the one thing virtually no one knows,” Stephen says. 

“If you ask 100 people from age 20 to 70 what they believe the right amount to save would be, almost no one can answer.” 

The answer, he says, is 15 percent of your income. For those who are concerned that a $1,500 paycheck—after taxes, social security, health care, and an additional 15 percent into savings—has just $1,000 for living expenses, Stephen says, “The reality is, if you don’t save 15 percent, you will be working when you’re 75 years old.” 

He adds the standard complaint heard by many in the financial business is that workers feel they need every penny of their paycheck every week. “The truth is,” he says, “someone is living on 15 percent less money than you are. You can save. You just have to choose not to eat out as much, or have the latest cell phone plan, cable streaming services, nicest car, etc. Anyone, even people in a lower income bracket, can save.”