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By Carleton English

Let’s talk about the six month milestone.

That is, you need to have three to six months of your annual salary in savings in order to befinancially secure.

The advice sounds simple and all financial advisors will tell you the same, regardless of how they dress it up to appeal to their demographic.

This is a real number. For more mathematical minds, this means that 25 to 50 percent of your annual salary should be sitting in a savings account. If you’re earning $50,000 a year, that’s between $12,500-$25,000.

You have the advice, and I’m sure I’m not the first one to give it to you, but the question remains: Why is this number important, and how do you get there?

To answer the first question, three to six months salary is enough to cover you in just about any financial hardship. It’s enough of a cushion to plan your course of action should you find yourself unemployed and without a severance package. It will cover moving costs should you need to abruptly move, and will cover a down payment on a car should you suddenly need one. And if you find yourself in a situation so dire that that even six month’s savings won’t cover you, it’s likely to buy you some time and some bargaining power.

Now, how do you get there though?

First jobs out of college do not often come with hefty signing bonuses. Unless you maintained a serious full-time job during college, your savings account is likely pretty bleak, and with student loans to pay you may already be living in the red. Here a few tips to motivate and actually help you reach this important milestone.

Having savings is the most important investment you will ever make; you’re investing in yourself and your future. At the risk of sounding too capitalist, money does solve and prevent a lot of problems. Financial security means not worrying if you have enough to cover rent, not being surprised by bills, and having the freedom to make choices.

Realize that an early compromised style of living will pay dividends, and perhaps fuel those fun “back-in-my-day” stories to tell the grandkids. We all have dreams of our first apartment, but delaying that dream for a year to live with family or rent a room can be a fast track to savings. A year of living rent free will get you to the lower threshold of your savings goal. If you’ve been on your own for a while and still lack savings, consider downsizing the next time your lease is due for renewal or taking a roommate (and saving, not spending, the difference!).

Make your own choices with your money. It seems the second you start to feel like you have your life together, your mailbox is flooded with invitations to celebrate others’ life choices. Weddings, baby showers, birthday dinners, bachelorette parties—these are all fun milestones, but they also come at great cost. Just make sure that that cost isn’t your future. Prioritize the events you go to and remember that friendships are about emotional support, not gifting seldom-used Waterford-crystal punch bowls.

www.StLouisHomesByGina.com The Gina Koerner Team 636-229-8746