Pattie Lovett-Reid: Knowing your financial age
Age is a relative thing.
We all have a chronological age. This of course is the age you actually are based on the year you were born. However, we all have a biological age as well. This is the age of our body driven in part by how well we have taken care of it, and of course the genetics we have been given.
Finally, we also have a financial age –the amount of money we may have saved over time. If you started investing early in life, have been consistent in your approach, and have let time and compounding work in your favour, you likely have built up more savings than someone your chronological age. This allows you to have a financial age much older than someone who hasn't started to save.
To sum it up: my age is what it is. I hope my biological age is much younger as I try to reduce stress, eat properly and exercise regularly. However, I want to be ancient when it comes to my financial age. It’s good to plan to live until 100, even if you don't want to live that long. This will help you increase the odds of not outliving your money.
Here are some ways our family saves money.
1. Starting small but thinking big. Establish an emergency fund with small regular payments taken automatically from your account. Establish goals that get you excited, write them down, and revisit them.
2. Save 50 per cent of any extra money you receive. Whether that’s a bonus, inheritance, tax refund – just do it.
3. Think about saving money for health care down the road. You could live longer than you think.
4. Maximize your company benefits. Comprehend you benefits package and take advantage of all employer-sponsored matching programs.
5. Once your debt is paid off, establish a habit of paying off your credit cards each month.
6. Check your credit rating at least annually.
7. Comparison shop. Look for the product that best suits your needs and. This may not always be the cheapest product out there. Buying cheap can get expensive very quickly.
8. Designate a no-spending day once a week and stick to it. Take the money saved and put it aside.
9. Increase your mortgage payments when you can, even in a low-interest rate environment.
10. Unsubscribe to emails that can be seductive and lure you into deals.
Face your financial age head on. Your birth certificate doesn't lie, nor does your bank account. Take charge now.