| ||||
|
|
Pay yourself first: Saving for the future not impossible goal
Texas
Outsourced jobs, shrinking incomes, growing health care costs, confusing tax laws --money matters are high on the list of issues this election year.
No individual taxpayer can solve all these issues alone. But each can address personal money issues by taking advantage of available financial opportunities, said Nancy Granovsky, Texas Cooperative Extension family economics specialist.
According to the spring 2004 issue of the Statistics of Income Bulletin (released by the Internal Revenue Service), 15.1 million taxpayers contributed to Individual Retirement Accounts in 2000 (the most recent year available). That's only 9.5 percent of those eligible, Granovsky said.
That means more than 90 percent of the American taxpayers who could be building financial security for their futures aren't doing so. And that's a shame, Granovsky said, because that kind of savings plan shouldn't be out of reach for most.
"You don't have to save much at a time," she said. "The secret is saving (money) and finding a place to put it."
Individual retirement accounts are available in two forms, she said:
--Traditional IRAs, which grow from tax-deferred dollars. Taxes are paid on this money when withdrawals are made, when the retiree may be in a lower tax bracket.
--Roth IRAs, which grow from contributions that have been taxed. No income tax is due on withdrawals, which means earnings are tax-free.
Traditional IRAs can be set up by any wage earner (or spouse of a wage earner, if they file a joint income tax return) who is younger than 70-1/2 years and who meets certain income requirements.
Roth IRAs can be set up by wage earners of any age who make less than $95,000 if single and less than $150,000 if married.
That includes, Granovsky pointed out, people making minimum wage. And that means a low income shouldn't prevent anyone from saving for his or her future.
But people who have low incomes don't have any money to spare, right?
Not necessarily, Granovsky said. When it comes to saving money, little things mean a lot.
For example, she suggested, quit buying soft drinks from machines every day. That single step can result in the savings of a dollar or two a day, which at the end of a month could be $20 or $30.
Brown-bag lunches can result in a savings of $5 or more each work day, or $25 each week.
The price of gasoline has risen and is likely to stay that way. Leaving the car at home one or two days a week whenever possible will cut costs and bring in more savings. Walking, car pooling, using public transportation when available and riding bicycles can accomplish the same thing.
And as an added benefit, Granovsky pointed out, some of these cost-cutting steps can improve physical health and environmental health too.
Once the savings habit is under way, visit a bank or credit union to see what is available for smaller investors, she advised.
"Most financial institutions will offer IRAs as a tool for their depositors or members," she said. "You don't have to save the maximum amount every year. Start small and don't touch it (after opening the account) because it's for your retirement."
The only basic requirement for opening an IRA is having an earned income, Granovsky said. After that, she offered this advice:
"First, decide to do it," she said. That means making a personal commitment to save for retirement.
Then start budgeting. Pay attention to spending habits to determine where savings can be made.
After that, "understand how things work and where to go" for financial advice, Granovsky said. "Check with your financial institution to see what they offer. Then start learning about investing."
In addition to financial institutions, another source of information is Extension's Family and Consumer Sciences website at http://fcs.tamu.edu/. Click on the link to Family Economics.
Remember, Granovsky said, no amount is too small when it comes to saving for the future.
"You're never too young, you're never too old," she said.
"And you're never too broke."
Date: 9/23/04
Copyright 1995-2008. High Plains Publishers, Inc. All rights reserved. Any republishing of these pages, including electronic reproduction of the editorial archives or classified advertising, is strictly prohibited. If you have questions or comments you can reach us at High Plains Journal 1500 E. Wyatt Earp Blvd., P.O. Box 760, Dodge City, KS 67801 or call 1-800-452-7171. Email: webmaster@hpj.com
 
| |||||||||||||||||||||
