Different Strategies for Different People

by Kristina on August 30, 2012 · 3 comments

Good Morning DINKS.  We may all have different investments in our emergency savings fund, we may all have different strategies for our retirement savings plans, and we may all manage our personal budget differently. But the one thing that we all have in common is that we are all saving and managing our money.

Different people have different investment, budget, and savings strategies because everyone’s lifestyle is different. As an individual or as a couple we need to find the best strategies to fit our financial needs and personal lifestyle.  Some people choose to live on a cash budget and some people choose to make their home an investment.

What are your investment, budget, and savings strategies?

– Emergency Savings Fund.  An emergency savings fund is a savings account that we have and usually don’t use unless we have a last minute financial emergency. Everyone’s definition of a financial emergency is different, but it usually includes an unfortunate death, unexpected home expenses due to damage, and last minute travel plans because of family emergencies.

Some people choose to save cash in a High Interest Savings Account or invest in close to cash short term investments such as Treasury Bills and Money Market Funds or for their emergency savings fund.  This is a good idea because the funds are readily accessible if we ever need to use the money and if we don’t need the money it will still earn some interest.

Not everyone likes to have cash savings in their emergency savings fund.  Some people choose to have a line of credit as their emergency savings fund; they only use it in the case of an emergency. Some people choose to make payments towards paying off the debt if they do use their line of credit, instead of making regular contributions into a savings account.

– Retirement Investment Strategies.  Some people like to take risk a high risk approach on their long term investments inside their retirement portfolio to ensure that they have capital growth on their investments over the long term. Some other people choose to take a more conservative investment approach and preserve their capital to ensure that they have some money to retire with.

I personally like to take a balanced approach with my investments and have a 60/40 split of growth oriented equity based stocks and conservative fixed income bonds in my retirement portfolio.

Some other people choose not to save in a retirement portfolio but instead they invest in real estate as an alternative retirement savings strategy.  Then they can sell their real estate properties at retirement and live off of the proceeds, but while they are still working they collect a monthly income if they choose to rent out their real estate properties.

– Managing Our Personal Budget.  How people choose to manage their budget whether it’s individually or together as a couple varies among families. Our personal budget starts with our expenses and spending priorities.

Some people make sure they save a certain percentage of their income and then they budget in their living expenses afterwards.  Some other people pay all of their expenses first and then save whatever little bit of money they have left over. How much we chose to spend and how much we chose to save each month depends on how we manage our budget.

Due to the fact that I don’t have any children, I don’t cook very well (or sometimes at all), and the fact that my boyfriend enjoys having all of the latest electronics I choose to force my savings through employer savings plans and regular automatic contributions.  Before I wake up on pay day my savings are already transferred to my various investment accounts and therefore whatever is left in my bank account is mine to spend.

Photo by Nina Matthews

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{ 2 comments… read them below or add one }

1 DC @ Young Adult Money August 30, 2012 at 12:37 pm

I also have a forced savings plan through my employer. Mine is through a stock purchase program that takes 10% our of each paycheck. We can sell every 6 months, so it’s a pretty good deal. I started this right away so that I would be used to a lower paycheck, and it definitely has been a good idea.

2 Kristina September 1, 2012 at 1:35 pm

@DC – that is a good deal. I agree that it is easier to save a little bit from each paycheck rather than save for a major expense with a lump sum. We don’t even really notice a little amount “missing” from our pay check ever two weeks and eventually we get used to the lower amount, but investing regularly helps our savings add up very quickly.

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