Start Your Housing/Investment Fund Resolution for the New Year

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Hopefully, you can get as excited about this resolution as you did about yesterday’s post, Recycling Resolutions For The New Year. While recycling benefits all people in general, this one is of a more personal nature, with the added benefit of giving you a firm financial footing in life. I'm talking about starting your housing fund and learning about saving and investing, which will help propel you towards economic stability down the road. After all, putting off starting your housing/investment fund is how so many people end up in a less-than-preferable retirement situation.

To illustrate this, about 25% of current retirees over the age of 65 live primarily on a monthly Social Security check that averages $1,177 per month, according to this MSN money section article. And about 50% of retirees are fortunate enough to live on about $2,300 per month, with one half of their income being the $1,177 Social Security. That isn’t much because seniors have expensive monthly medical bills. That amount has to cover housing expense, food, medical insurance and medications, etc. At the end of the day that $2,300 translates into a very meager living for most of these people.

But you don’t have to end up this way because you can do something about it, starting now. You can take action to ensure that you'll have a higher probability of a comfortable retirement in the future. After all, doing nothing does nothing for you.

Unfortunately, the reality is that most of us are our own worst enemies when it comes to saving money because by nature, Americans like to buy goods and services. To successfully save, you'll need to balance that savings plan with spending needs. The real trick to saving money is to get the money you intend to save out of harm’s way, with “harm's way” being your easily accessible and often depleted bank account.

One of the better ways to do this is via a company sponsored 401(k) plan. They are great for helping you to move your money into a strict savings account. Some employers will even match however much you put into your 401(k), meaning that if you deposit $100 into your 401(k), your employer will also deposit $100 into it, giving you $200 in that plan. But if you're self-employed or do not have access to a 401(k), you'll need to take the initiative to start your own savings plan. This should be primarily though a tax-deferred account like the 401(K) or an Individual Retirement Account (IRA), but could also be through a regular taxable mutual fund, diversified stock portfolio (as it grows), or other investment vehicle.

One of the best ways to grow your savings is to set up an automatic investment process where money from your paycheck or checking account is repeatedly transferred to some type of savings or investment account. Even if it is just $25 per month, that will get your brain accustomed to the process of putting money away for a home downpayment or investment savings. For more information on this, read Saving a Downpayment for Buying a House.

So as another new year's resolution for 2012, schedule and meet with a reputable and licensed financial advisor at your bank, or a company like Charles Schwab or Fidelity Investments. Start educating yourself on the endless benefits of saving money so it compounds each year, helping you to build up your home downpayment or retirement fund decades before you have to retire. This will allow you to have your house paid off and possess plenty of investment income as well so that you may experience a comfortable retirement down the road. Don’t make the mistake of pushing it off to the following year(s) because with each new year, you get closer to retirement, so the more you learn and save this year, the younger you will be when you can finally say goodbye to having to work for a living!