SALT LAKE CITY– We’ve all made mistakes with our money. Whether it’s blowing $500 on penny stocks off a bad tip from a friend like Dave Noriega did, or any other number of things that can get us into trouble with our money it’s important to know where the pitfalls are so we can avoid making mistakes that can put our financial wellbeing in jeopardy.
“People wait too long to start saving for retirement,” Milne told Dave and Dujanovic Thursday.
“That’s really a big mistake because the biggest thing that you have going for you is the longer you have your money invested in your 401k or IRA the longer it has to grow.”
Milne says a good rule of thumb for saving for retirement depends on when you start.
“If you start saving for retirement when you’re 16, like I’ve asked my own kids to do, you can get away with $600 a year and stay at that level for the next 60 years you’ll have a million dollars by retirement age.”
If you start later though Milne says that number grows. He says if you start saving for retirement at at age 26 that number needs to be $1,300. If you start at 36 you’ll have to save $3,000 a year and if you start at 46 that number becomes $7,000 a year.
Adults get to pick where they live If the amount that you’re spending on rent is more than 30% that’s probably not a good move,” he says that extra money could be put to use more productively somewhere else like saving for retirement or for a school savings account for your children.
“Oftentimes when you’re a student, you’re not looking at the price tag, you’re maybe looking at the prestige or the fact that ‘s where your family went.” Milne says that if you have the money great, but if you don’t spend some time at a community college.
“Pick an affordable school, then you won’t be in the $30,000 debt students are on average.”
Discipline isn’t enough to make the kinds of changes that we need to be good with our money Milne says because “Discipline is like a muscle, and over time you’ll get worn out and go back to your old behavior.” Which is why he says it’s your habits that you need to change.
Lot’s of people when they hear the term budget they stop listening Milne says, but that might be because they’re thinking about bookkeeping instead of budgeting.
“If you’re just entering in what you spent into Quickin or Mint you’re not budgeting. Budgeting is something that should be done together in a family and should be set up every month where you plan on how much money you’ll be making and how much you plan on spending.
Have an emergency fund. Milne says that the majority of Payday loans are for $500 and by the time they get paid back with interest it adds up to $1,000, something he says could be avoided if people have some money saved away in an emergency fund.
You can hear the rest of the conversation with Don Milne and hear from this weeks winner of the #ksl1k in the podcast below.