CPAs urge consumers to get financially fit
News Release
For More Information:
Amy Johnson, Senior Manager, Public Relations
E-mail: ajohnson@ohio-cpa.com
614.764.2727, ext. 341
Ten simple strategies to build a nest egg
(COLUMBUS, April 17, 2007) – April is Financial Literacy Month—a good time to take stock of your personal finances and make sure you are on track to reach life goals.
The Ohio Society of CPAs says too many Americans are leaving their futures to chance by not adequately managing their finances or saving enough for retirement.
In the past two years, Americans’ savings rates have slipped into negative figures for the first time since the early 1930s, when the country was experiencing the Great Depression. In addition, Americans have enjoyed greater prosperity and higher incomes in recent decades, which have led to a more relaxed attitude about spending and saving.
The unfortunate result is that many baby boomers are nearing retirement with inadequate savings to maintain their current lifestyle.
That’s why The Ohio Society of CPAs is urging consumers to learn more about money management and investment strategies through its Financial Fitness Ohio program.
CPAs recommend that young adults start saving early, using 10 fundamental savings and investment strategies to build healthy money management habits for a lifetime.
- START SMALL
Try saving10% of your monthly income, or a smaller amount if you can’t afford that much. Consistency is what counts. Pay yourself first and increase your savings rate when you are able.
- CONTRIBUTE TO YOUR RETIREMENT PLAN
If you have a 401(k) plan at work, contribute at least as much as your company matches. Otherwise, you are passing up free money.
- SAVE THROUGH PAYROLL DEDUCTION PLANS
Many companies offer automatic savings plan in which you can deduct a set amount from your pay check and redirect it to a savings account or into U.S. Savings Bonds.
- SET UP AN AUTOMATIC INVESTMENT PLAN
Many mutual fund companies will arrange to deduct $50 or more from your bank account each month and deposit it into a mutual fund account. With this systematic approach, sometimes called dollar cost averaging, you buy more shares when prices are low and fewer shares when prices rise. The net result is that your total investment cost is averaged over time.
- ‘ROUND UP’ YOUR MORTGAGE PAYMENT
You can build equity in your home faster and save thousands of dollars in interest simply by “rounding” up your mortgage payment. Consider increasing what you pay to the nearest hundred or just send an extra $50 or $100 each month.
- BANK YOUR RAISES
When you get a raise, continue to live on your previous salary. Deposit the additional funds into a savings or investment account and you’ll be surprised how quickly your balance grows. Do the same with your income tax refund check.
- PAY OFF LOANS, THEN PAY YOURSELF
When you finish paying off a car or personal loan, continue to make the same monthly payment—but to yourself instead. Put the money in a savings or investment account and when the time comes to buy a new car, you may find you have enough to pay cash in full or at least make a substantial down payment.
- PAY OFF YOUR CREDIT CARDS
Consolidate your credit card debt on one or two cards with the lowest interest rate. Start paying as much as you can each month to eliminate your credit card debt.
- REINVEST DIVIDENDS
Reinvest dividends from stocks and mutual funds, to purchase additional shares and make your investments grow faster.
- KEEP TRACK OF WHERE YOUR MONEY GOES
Understanding how you spend your money is key to determining how you can reduce expenses. Carry a small notebook with you and keep track of every dime you spend for several months. Build a detailed budget and stick to it.
If you start early and save wisely, you’ll amass quite a nest egg to carry you comfortably into your retirement years.
These savings tips are offered by Financial Fitness Ohio, a public service program of The Ohio Society of CPAs. For more smart tips on managing your money, visit www.financialfitnessohio.com.
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The Ohio Society of CPAs, established in 1908, represents more than 24,000 CPAs in business, education, government and public accounting. The Ohio Society’s members not only meet statutory and regulatory requirements as CPAs, but also embrace the highest standards of professional and ethical performance. This is achieved through ongoing professional education, comprehensive quality review and compliance with a strict Code of Professional Conduct.
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LAST UPDATED 4/17/2007