Popular opinion among many Gen-Y’ers marches to the tune of, “see the world when you’re young, you have plenty of time to save money.”
While the advice contains a positive message, it may leave many young adults struggling with financial woes later in life.
Here are three reasons why it’s never too early to start saving money, as mentioned in this Forbes report on JPMorgan’s 72-page outline on savings.
- Life-altering events can eat away at your income. The article mentions how likely it is for three-quarters of adults aged 50-60 to experience “job layoffs, widowhood, divorce, new health problems, or the onset of frailty among their parents or in-laws.” NASB believes it’s just as important to plan for these events in your early 20s as it is in your 30s, 40s, etc. The report by JPMorgan suggests stowing away approximately 15% of your annual pre-tax income. As your income grows, so too should your savings budget.
- Your home’s property value may appreciate less than you desire. If you plan on living off of the return in your property value once you surpass retirement, you may be shorting yourself. The report suggests that without savings, today’s housing markets don’t appreciate at high rates of return – at least not to off-set the cost of living after retirement. Of course, there’s always a risk of your property depreciating and losing your money.
- When it rains, it pours. There are times in life when you may feel burdened by unexpected costs that keep piling up at once. If this happens, it’s essential to establish a sturdy savings foundation to tap into. If not, you may be facing serious financial woes later in your life.
There are other factors explored in the report, like political shifts on monetary policies for example. More importantly, it’s useful for young adults to think ahead for whatever life could throw their way. By all means, adhere to the popular opinion of living while you’re young. But consider, too, the possibility of needing a financial crutch during a stressful life event.
At NASB, we’re proud to offer our customers personal banking products to fit their unique financial goals. Call us at 800-677-6272 for your financial needs.