Saving for Specific Needs

Saving for Specific Needs

Saving for Specific Needs

When looking to the future a common financial goal is to save money for specific needs. Consumers typically save for a wide variety of reasons. A survey by Merrill Lynch showed that retirement is the major reason for saving, followed by a desire for financial security for the family and children. Saving for college and a home or to pay a title loans Atlanta is also important to many consumers.

It is also desirable to save for an unexpected emergency. Consumer experts typically recommend that you accumulate a liquid emergency fund equal to four to six months of take-home pay. Thus, if your monthly take home pay is $1,500, you should have a liquid emergency fund of $6,000 to $9,000. An emergency fund is especially important with respect to the risk of unemployment. Most workers will become unemployed several times during their working careers. A liquid fund of four to six months of take-home pay can substantially reduce the painful financial shock and economic insecurity that result from unemployment.

Although saving for specific needs and having an emergency fund are extremely important, many Americans have little or no savings. Saving is a low priority item for many Americans.

Shows that household savings in the United States as a percent of disposable personal income (personal income less personal taxes) averaged only 4.6% in 1993, last among our major international competitors.

Protection of family and Property

Another important goal of financial planning is the protection of your family and your property against a certain risk that create economic insecurity. Risk traditionally has been defined as uncertainty concerning the occurrence of a loss. Certain risk can create great economic insecurity for individuals and families. These risks include (1) premature death of a family head in which the family’s share of the deceased breadwinner’s earning is lost forever; (2) insufficient income during retirement and reduced standard of living; (3) poor health and catastrophic medical bills and the attendant loss of earned income and (4) (4) pay high interest on commercial truck title loan.