Welcome to Tru Direction where our mission is to help you find your way
to financial fitness.
Personal finance can be a tough topic for educators and parents to teach, simply because many of them haven't mastered it themselves. That's why we're here— to help individuals at any life stage better understand personal finance and money management. It's never too soon or too late to learn best practices for saving, borrowing, and planning for the future.
Your days of managing money by trial and error are over. It's time to find your Tru Direction.
Have money ... will save. The new year is a perfect time to begin, review or add to your financial savings plan. If you are just starting in the workforce or further along, retirement may or may not be a part of your current thinking -- but do consider including it now. For your sake, it's never to early to start.
Below are a few steps to begin the process:
START NOW! It may seem difficult right out of high school or college to set aside a percentage of your pay that you can’t touch for the next 40-50 years. But most likely you can and you should. Here’s why: 401(k)s, like any interest-bearing accounts, have this little advantage called “dollar-cost averaging and compounding.” When you put a portion of your pay into a 401(k), it starts earning interest. That interest adds to your total balance and together it continues to grow.
Take employee match. Most companies offer an employer match, typically around 3%, on the money you contribute to your 401(k). If you contribute 3% of your pay and your employer matches, you now have 6% dropping into your retirement account every payday. Remember that compounding concept from number one? More "growing" money is the theme here.
Increase your contributions yearly. If you’re doing what you should on the job, chances are you’ll earn either a yearly bonus or pay increase. This is an excellent time to increase your 401(k) contribution and you won’t even notice it. If you get a 2% pay raise, treat yourself to something special and then immediately increase your regular contribution by 1%. You can’t miss what you haven’t lived with yet! Then, refer back to point number one and prepare to watch the savings increase.
Don’t touch it! Do. Not. Touch. It. You may be tempted to make an early withdrawal from your retirement savings for any number of reasons. While expanding your DVD collection may seem like a solid investment at the time, funding it from your 401(k) will only extend your working years. Withdrawing prior to the age of 59.5 comes with very expensive penalties (10%!) and reduces the balance available to earn that interest we highlighted in the first paragraph.
Sarah Staller, Elements Financial, Contributing Writer