Kimberly Studdard knows it’s important to save for the long term. See her story below.
On March 14th, 2012, my papa had a heart attack while driving his 18 wheeler. He drifted across a highway, flipped his truck, and crashed. He died in the hospital two days later. When my grandmother went to bury him, she was told that his life insurance didn’t cover the way he died, so she would have to pay out of pocket for everything.
My papa was the sole provider in his household. He thought he had everything controlled, and thought he had at least 25 years to save money before retirement. He thought that in 25 years, his social security would kick in, and he and my grandma could downsize and have smaller payments on their bills.
When he died, my grandma was left with a burden that she couldn’t bear alone. She couldn’t afford her lifestyle anymore. From the stress of money and losing the love of her life, she had a stroke. She was deemed unable to work and now she lives on $950/month from social security. She also needs additional monetary help from my family to cover the remainder of the bills.
Would my papa have chosen this life for my grandmother if he saw it coming? Of course not. But, as most people, he thought he had his whole life ahead of him for long term saving and to invest in his retirement.
In the last year alone, I have lost 5 friends to car accidents, sickness, and violence. None of these people expected to have their life cut short, and every single time their family didn’t have the means to bury them without help of donations.
So why am I telling you all of this? Because I want you to start saving. Right now. I want you to plan for your long term saving, your retirement, and eventually, your funeral. You shouldn’t want your family to carry on your debts and bills. I’m not saying it’s going to be easy, but I am telling you that you are going to set yourself and your family up for success if you are prepared.
You don’t have to start saving $1,000 a month right away. If you are under 30, most likely you are in school, or just starting out in your career. However, this shouldn’t stop you from saving SOMETHING, even if it’s just $25 a paycheck. Put that money away in a hard to access account, that way you aren’t tempted to transfer it and spend it.
As time goes on, use any raise or bonus that you receive to pad your savings even further. Continue to live on the lowest salary you possibly can. Pretend as if you aren’t even receiving that extra money. Have all the extra deducted from your paycheck automatically if you have too.
By doing this, although it may not seem like much, you are learning the importance of savings. If any emergency were to come up, like your car breaking down, or your pet gets sick, you will most likely be able to pay for those incidents with cash.
But there is much more to that. Long term saving can also come in handy if one day you can’t work, or you have to spend quite a bit of time in the hospital, or if you die earlier than expected. I know that may sound extreme, but anything can happen in the blink of an eye. You don’t want to be caught unprepared.
Set Short Term Goals For Long Term Saving
So, if you are anything like me, you hate to have long term goals. I know it’s terrible, but I can’t stand having to plan 5-10 years down the road. I get frustrated thinking about all that I have to do for ten years just to get my reward.
Instead, I set multiple short term goals that all interlink to one long term goal. For example, my fiance and I have been planning a huge cross country move. Instead of saying that we need to have $5,000 dollars in a year, we are saying that we need at least $450 saved every month.
If we hit our monthly goal, we celebrate. If we don’t, we vow to try harder the next month. We aren’t forcing ourselves to focus on something a year away, but at the same time we are making sure we will be ready by surpassing our short term goals.
You should do the same thing if you find yourself getting antsy at not reaching goals as fast as you would like. You could make a lot of small goals and feel accomplished vs. having one long term goal that you give up on because you don’t think you are getting anywhere.
I’ve written about starting to invest while you are young. The younger you are when you start saving and investing, the more money you will potentially have when you decide to retire, or when other life events happen.
Take into account that some of the money you invest may have rules about withdrawing it. You may have to pay a penalty if you are under a certain age, or if you dip under a certain amount. But also know that the money is your money, and if you need it, use it.
Read Your Contracts
This should be a no-brainer, but so many people I know don’t read simple documents. Don’t expect a lawyer to do all of the work for you. Don’t expect someone to explain every piece of information on your documents. Read and comprehend them for yourself so you know exactly what you are getting into. Read your life insurance policy, your health insurance policies, your medical disability policy. You can even read your car insurance policy to see what they cover and don’t cover.
This may not go directly with saving money, but I promise you that it is related. My papa had life insurance, but the way he died wasn’t covered under that life insurance, so my family had to pay for his funeral and burial.
Had he read his documents, he would have realized that he had the most basic coverage he could possibly have, and also that the policy only covered “accidental deaths”. So here he was, paying $75/mo for almost 25 years, on a policy that didn’t even help him. Think about it. That’s almost $23,000 dollars over the course of that time. He could have invested that money in a savings account, 401k, or better life insurance.
Keep Your Family In The Loop
This ties into both letting your money grow, and also reading your documents. You should always keep an up-to-date will (if you don’t have the funds to do this, check with your local library for free forms), and make sure that you have beneficiaries in place. Also, if you want to set up a trust fund or college fund for kids or future kids, start planning that as well.
Keep all your documents somewhere that most people won’t have access to, and that can’t be destroyed due to natural events. I recommend a fireproof safe, as it can have a lock pad or key so only you can access it.
This may seem odd, but it’s important to make sure your family is aware what accounts you have, and what they could access should they need to. If, for any reason, you were unable to access your own accounts (due to death, hospice, etc.), your family should have the correct documents and information. This can save them a lot of time, hassle, and heartache.
Prepare For Your Death
I know what you are thinking. No one wants to plan for the day they are going to die. But, since we never know when our time is up, it is best to plan for it ahead of time. As I said before, keeping an up to date will is important.
It is also important to have clear set rules on what you want your family to do when you die. There have been many cases of people contesting wills, but if your family knows how you feel and what you want, they are more likely to go along with your plan.
All of those parts are important in preparing for your death, but the best way is to have money set aside for your funeral or cremation. Normally, a cremation is less expensive, so if you don’t want to put too much money aside that could be a great option for you.
Many people like to live in the here and now, and most often, they get caught in a huge mess when something life changing, or life ending, happens. Don’t wait to start saving. Don’t think you have forever to live. You can enjoy your life and still save for just-in-case scenarios. Start your long term saving now, because you never know what your future may hold.
My name is Derek, and I have my Bachelors Degree in Finance from Grand Valley State University. After graduation, I was not able to find a job that fully utilized my degree, but I still had a passion for Finance! So, I decided to focus my passion in the stock market. I studied Cash Flows, Balance Sheets, and Income Statements, put some money into the market and saw a good return on my investment. As satisfying as this was, I still felt that something was missing. I have a passion for Finance, but I also have a passion for people. If you have a willingness to learn, I will continue to teach.