According to Forbes, basketball star and businessman LeBron James is now worth an estimated $1 billion, but the Ohio-native didn't grow up wealthy and his family struggled to make ends meet. They taught him to save early on.
James said my uncles taught me how to have a savings account because they taught me how to have a savings account. There are some of the best savings account rates you can get now, which is good news if you're thinking about saving more, as a number of savings accounts are paying upwards of 3%. He continued: They d give me a dollar and they d be like, Listen, nephew, go spend 35 cents of it and keep the other 65. If they gave me two dollars, they would be like, Go ahead and spend a dollar of it, but stash the other dollar. James stated that he doesn't buy everything he wants, but he also states that growing up at the bottom always creeps into my head, and I end up saying, I don't need it there's nothing more I could give myself that would make me happier. Pros say James uncles taught him a very useful habit - even though they don't know what percentage of money one should save. This is a great example for all younger kids to learn about money, spending, banks and more, according to Rob Riedl, a certified financial planner at Endowment Wealth Management.
For his part, certified financial planner Joe Favorito of Landmark Wealth Management says he agrees with this premise of saving, although the ratio of spending to saving isn't the same for everyone as we need to spend some of what we make to cover essential expenses. There should be some discretionary spending, because we all want to enjoy life to some extent, according to Favorito.
A good rule of thumb for non-billionaire celebrities is to save 10% of their gross income for retirement goals and other savings. If you have outstanding high-interest debts, make sure to pay those off quickly before you allocate a full 10% of your retirement savings, and build up an emergency fund of at least three months worth of expenses.
if you can save more, hit the 10% and then hit the 10%. According to Favorito, the best tax benefits for retirement plans like a 401 k usually give the best tax benefits for accomplishing this, and any additional savings should be goal based, such as saving for a home, as well as having an emergency fund of at least six months of expenses.
Too few Americans have the savings they should, because of the fact that they have nowhere close to the amount of savings they should. A survey this year of more than 1,000 adults conducted by Bankrate showed that nearly 56% of Americans couldn't cover an unexpected $1,000 bill with savings. Automating savings is a way to make savings easier and easier to manage. It is easy to come up with excuses from month to month about things that didn't allow you to save what you wanted, says Favorito. If you automate your savings right from your paycheck, you can control your spending habits and make do with what you have left.
Riedl believes that saving is the first good habit and investing is the second. A low-cost diversified portfolio is used to invest roughly the same amount of money at regular intervals a set amount per month in the financial market. The tax savings and company matching are all possible with a 401 k plan or an IRA. The power of compounding will be your long-term friend, and annual rebalancing of the portfolio at a minimum is a must, says Riedl.