Personal Budget Plan Terms to Know:

Longest Term Savings: this is where you really start to build wealth. Most people consider this the retirement savings. The stuff you really can not touch until you hit that magical age. I know, you NEED the money now to do blah, blah, blah. Believe me, I appreciate that. I do. BUT…. This is the single BEST way to ensure that you can really build wealth.

By having a fat account, more people want to share genuinely lucrative offers with you, more banks will see you as a good credit risk and therefore reduce your interest rate on various loans (mortgages, business and otherwise), etc. There are a myriad of reasons to have savings other than to stash cash. It makes you look like a responsible adult….

Personal Budget Plan strikes again! If your company offers a 401k matching program, do it! That’s free money folks. In Economic terms, by not participating, you are leaving money on the table. It would be like tipping your boss for his excellent use of meeting time . . . um, right.

Any company matching program is probably a good idea. The one caveat – make sure *YOUR* dollars can travel with you. Even if your company yanks its matching funds if you leave prematurely, all of the money YOU contribute should travel with you. Ask your company representative or the account custodian (Fidelity, JP Morgan, etc.) to make sure.

Other options: of course you can use an IRA, Roth IRA, etc. You can also use a number of other vehicles: mutual fund portfolio, CDs, T-bills, US Savings bonds, etc. There are tax considerations, education considerations, home purchase considerations . . . your situation will dictate what works best – there is no one size fits all – beware anyone who says otherwise.
Personal Budget Plan Terms to Know Day 2