What to Do With Your First Real Savings
You have finally got a cushion. Here is how to keep it from quietly disappearing.
The first time you have a meaningful amount of money in the bank, the feeling is oddly unsettling. You are not sure what it is for. You are slightly afraid to touch it. And you have a vague, uneasy sense that you should be doing something clever with it.
You do not have to be clever. You have to be orderly. Here is a simple sequence:
- Build a buffer. Three to six months of essential spending, in an easy-access account.
- Clear the expensive debt. Anything with a high interest rate comes before everything else.
- Name the next goal. A deposit, a course, a trip. A named goal is far more likely to be reached than a vague one.
- Automate it. Set up a standing order for the day after pay arrives.
This article is general information, not financial advice. Consider speaking to a qualified adviser about your circumstances.
Written by
Odette Marsh
Contributing writer on work, money and relationships. Formerly a financial journalist; now mostly interested in the conversations people avoid.