Whether you’re saving to reach a personal milestone like retirement or helping a family member go to college, having a strategy can help. Saving can’t protect you from all the bumps in the road ahead, but a plan gives you confidence that you’ll be able to reach your goals.
Here are suggestions from our Michigan bank to help you get ready for the important events in your life, how and when they happen:
Starting Your Career
As you complete your education and take on a full-time role, it’s time to create the foundation for your financial health. Following these steps will keep you in good standing with creditors which is essential for getting a high personal credit rating. With appropriate planning, you’ll still have some funds for fun, too!
- Establish a budget (and stick to it). Review your monthly income and required expenses like rent, utilities, food, and transportation.
- Monitor your expenses. Keep a log of discretionary expenditures to help minimize any overspends.
- Pay down loans or other debts. Allocate money in your budget to cover student loan payments and credit card debt.
- Set up a savings account(s). Believe in the phrase ‘pay yourself first’ to start building a fund for unexpected issues like car repairs.
You and your future spouse will soon be sharing your respective financial situations – the good and the not-so-good. Set aside time to discuss your current status and outline how you’ll pay for big-ticket items such as where you’ll honeymoon, where you might live, and the lifestyle you can afford.
Are you planning to pay for your wedding? In Michigan, the average wedding cost is about $22,000. But if you live in Grand Rapids, you may spend less than $12,000! There are plenty of Banks in Grand Rapids (especially ours!) that can help you set a budget and create a savings plan with a monthly contribution that will get you to the church on time!
Buying a House
If you're interested in purchasing a house in Michigan, two key financial goals are:
- Saving funds for a down payment. By putting more money toward the cost of your home, you'll have a lower monthly payment. The average house in Michigan costs $150,000 last year.
- Getting pre-approved for a mortgage loan from a Michigan bank. The pre-approval process lets you know how much house you can afford to buy and speeds up the purchase process.
Talk with your banker and real estate agent about finding the best financing for your budget and buying a property with good value.
Having a Child
Raising a child from birth through adulthood cost more than $233,000 a few years ago. Fortunately, the total expense of caring for a child doesn’t happen right away. First year expenses are high, however, since you’ll purchase furniture, car seat(s), clothing, diapers, food, and toys. Depending on your situation, your budget might include the cost of childbirth, which is roughly $6,000-$9,000 in Michigan. Michigan daycare costs for infants are about $10,000 annually.
Our Michigan bank recommends setting up a savings plan to pay for these initial expenses. When your child enters school, you’ll have money to pay ongoing costs for school supplies, clothing and ‘wish list’ items like skating or hockey lessons.
Saving for College
The future of college costs is uncertain, but some projections show that a 4-year degree could cost nearly $500,000 by 2037. Trade or vocational schools currently cost about 1/4th the price of a 4-year degree. Based on the college projections for 2037, a trade school education could cost roughly $125,000.
Many Michigan banks suggest that parents begin saving immediately after birth for a child’s college education. Savings solutions like Roth IRA accounts or 529 plans are options that offer tax advantages and the opportunity to earn interest on your investment.
Preparing to Retire
When you’re fully immersed in your career and your family, retirement seems like a faraway dream. Start saving for retirement early in your career and you’ll have funds to enjoy your non-working years.
If you choose to retire in Michigan, you'll need roughly $50,000 annually to live comfortably, or about $1 million for a 20-year retirement. These estimates reflect the current costs of housing, healthcare, food, utilities, fuel, and personal expenses. Your bank in Michigan can help with a savings estimate that reflects your retirement goals.
Are you planning for one of life's milestones? Let the team at Level One Bank help with a savings strategy. Helping you realize your dreams is our passion. Contact us today for information about our savings solutions.
"Save money, and money will save you." Jamaican Proverb
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