| iv id="body"> | | | | small fund available for sudden, unexpected needs. If |
| What good fortune, to suddenly be handed a decent | | | | you're an adult with a family, you need to have the |
| sum of money! Of course it doesn't take long to "get | | | | ability to pay all your expenses for six months if you |
| giddy" thinking of what you can do with what seems | | | | were injured and couldn't work. That's the consensus |
| to be free money. But is it really free money? | | | | of most financial advisors. |
| Often, when someone gives you a "gift" of money, | | | | After you have an Emergency Fund that can handle |
| they ask you to spend it on something they want you | | | | at least one month of your living expenses, you should |
| to do with that money. Remember when your | | | | look at any credit card debt you have. If there is more |
| grandmother suggested you go to the local ice cream | | | | than one card involved, pay down the debt on the |
| shop and buy something special? She didn't want you | | | | card with the highest interest rate first. |
| to put the money in your piggy bank. When a gift has | | | | If you pay off your credit cards every month, and still |
| conditions or strings attached, you should act like the | | | | have some of this new-found money available, it's time |
| money really belongs to the person who gave it to | | | | to look at things you should be saving for. If you're a |
| you. They know what they wanted you to do with it. | | | | student, you should try to pay for your education as |
| And when you spend it like they ask you to, you're | | | | you go along. Any spare money you can use to pay |
| helping them feel good about giving you the money. | | | | for your education will help hold down the burden of |
| But there are times when you suddenly come into | | | | school loans later in life. |
| unexpected money and there are no strings attached. | | | | If you are a parent, you need to think about your own |
| This would be the case if you bought a winning lottery | | | | retirement and make sure you have a plan to save |
| ticket. That money is yours to spend as you want. | | | | money and invest it wisely in tax-qualified savings |
| You might want to take a small amount of the money | | | | programs like a company matched 401-k, or Roth IRA. |
| to celebrate, but the bulk of the money should pursue | | | | Once you have your retirement savings plan on track, |
| your life goals - the same way you used money | | | | you can start saving for your children's education. |
| before your good fortune. | | | | If all those goals are under control, you could use the |
| When you get a tax refund, you might want to avoid | | | | windfall to help build savings for your next car, |
| the celebration. Every penny of that refund is money | | | | vacation, or a piece of furniture. |
| you worked hard to get. You loaned it to the | | | | If you use your "free money" to pay off credit card |
| government "interest free" (good for the government). | | | | debt, or to invest, it will be worth more than it was |
| Now it's back where it belongs, in your bank account, | | | | when you first got it. Let's say you get $2,000 back as |
| ready to go to work for you. | | | | a tax refund. If you used that money to pay down |
| There are some simple guidelines for what to do with | | | | credit card debt that was costing you 21%, in two |
| your money. The guidelines are the same no matter | | | | years it would be worth $2,466.51. That's because you |
| where the money comes from. It can be salary from | | | | avoid paying $466.51 in interest on the account. |
| a job, prize winnings, or awards. The guidelines are still | | | | On the other hand, if you invested the money in a |
| the same: | | | | retirement account earning 8%, it would be worth |
| First, you need an Emergency Fund. That can be as | | | | $25,864.28 in thirty-two years. At that time, as you |
| simple as a cushion of extra money in your checking | | | | start retirement, the annual interest earned on that |
| account, or as complex as half of it in a savings | | | | money will be $2,069. This money would be working |
| account and half of it in short-term CD's. The idea is to | | | | for you to give you the original amount of $2,000 (and |
| have readily available money to handle emergencies | | | | a little more) as "free money" every year. |
| you might encounter. If you are just graduating from | | | | Free money shouldn't be squandered. A dollar is still |
| high school, you don't need a really big emergency | | | | worth a dollar, whether you worked for it, received it |
| fund if your parents are going to help you solve your | | | | as a gift, or found it lying on the street. |
| financial problems. But it's still a good idea to keep a | | | | |