If you haven’t done so already, make this your top priority.
A frugal influencer’s financial advice goes viral
Frugal living is becoming a hot topic on TikTok. USA TODAY’s Betty Lynn Fisher spoke with a financial planner who offered practical tips for saving money.
One of the reasons saving for retirement is so scary is that there are so many possibilities for mistakes. You may underestimate the amount you need to save and end up short in retirement. Or, you risk investing too much in one investment and incurring huge losses.
But one of the biggest mistakes anyone can make when it comes to saving for retirement is one that most people don’t think is related to retirement at all.
Emergency savings are the key to keeping your retirement plans on track
We think of an emergency fund as a tool to avoid unexpected debts and financial setbacks. However, it can also be seen as a way to smoothly manage household finances, including saving for retirement.
If your emergency fund is low and you have an unexpected expense, you may have to stop contributing to your retirement accounts while you try to put out the current financial fire. Once you’re finally able to start saving again, you’ll need to set aside more money each pay period to retire on time as originally planned.
This is why an emergency fund with at least three to six months of living expenses is one of your best financial tools. If an unexpected expense occurs, you can rely on this money to cover the bill, allowing you to continue your retirement savings as planned.
Once you have the immediate crisis under control, you can focus on slowly rebuilding your emergency fund until you have the funds you need again. That way, you’ll be prepared for the next unexpected expense.
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