Where to park your hard-earned money?
Statistically, I can tell you that 45% of women are not even asking the question. Why? There are ten accounts where you can park, so the parking lot is not full!
We go to work, collect a paycheck, pay our bills, spend what’s leftover, and spend what we don’t have (create debt). We have all heard the phrase “living paycheck to paycheck.” How do you avoid driving circles in the parking lot? Here are three easy steps:
Step 1: Know you have ten parking lots, i.e., types of accounts
Step 2: Decide you want to “park” in each lot
Step 3: Park before you spend
Notice, the three steps did not require you to understand the accounts or determine how much to park or acquire any technical knowledge. Bringing that awareness and providing you options will shift a spending mindset to a saving mindset. We can expand on this and say it’s not really about “saving” but about taking advantage of each lot’s benefits. Every dollar you park is now working for you. You have just hired your first “worker.” You may have heard the phrase “work smarter, not harder” well, this is how you do it! You are a CEO in charge of your health and wealth!
Benefits of parking your dollar’s: (varies by type of account)
- Compound Interest
- Inflation Hedge
- Receive “free” money (additional retirement contributions made by the employer, but usually only if you are contributing)
- Payless tax
- Pay no taxes
- Rainy day fund- now you are prepared for life’s uncertainties
- Have less stress knowing that your money is working for you
You don’t have to be a do-it-yourself kind of person or have a high-paying job; anyone can take advantage of parking money and creating wealth. If you need help, consider contacting a fee-only Certified Financial Planner. They are held to the highest fiduciary standard and have only your best interest in mind. After all, it is your hard-earned money.
See chart below: