What are Tax Free Savings?
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Learning how to deal with finances and saving money is something I didn’t learn in high school, or even in college. I really think that there should be a required elective in school that teaches kids about everything from mortgages or tax free savings accounts. Here in the US we have many different forms of tax free savings accounts, but this is called an ISA in the UK. As a “younger” person I have found that saving is HARD. Not because I’m not good at balancing a budget, but because after school things are normally so tight in our finances that we don’t have room to save. Between trying to buy your first house, have kids, and pay for furthering your education it’s tough to put away money for later. Why save for retirement if you can’t even pay for things now? It’s SO important to take advantage of tax free savings, whether it be via a Roth account, HSA, or any other option available.
3 Tips on Setting Aside Money for a Tax Free Savings Account
- Deposit is as you get it. – When I started saving for our Roth account I thought it would be best to set aside the money and deposit it into the account at the end of the year. But we quickly found that there was ALWAYS something that came up to pay for. A broken car, a medical bill, a dead AC unit. Life happens. Deposit your money – even if it’s only $5 – into your account immediately. If you don’t have immediate access to it when an expenditure comes up you won’t have it to spend.
- Set a goal. – Set a goal for home much you want to save in a year. Divide it by 12 and commit to putting that much away EVERY month. If you don’t have a goal to strive towards chances are you won’t set aside enough.
- Imagine the consequences. Not to be gloom and doom but think about your grandparents or elderly people now and how they have a difficult time paying for things. Now imagine that when WE are that age how much worse it will be because of inflation, our economy, etc. If all else fails imagine how badly you will need a steady income when you are retired and start chipping away at that now!