It’s not cheap to live in Alaska, and if you aren’t preparing for your financial future, it can come back to haunt you. There are many potential situations in which cash reserves will save you from heartache and misery. Here are five that should convince you to start saving now.
To buy a new car
Most Americans need an auto loan in order to buy a car. However, going into significant debt for your car can be extremely hard on your budget. According to CNBC, the average loan for a new car reached a record high of $31,000 in 2017 and the loan amount for a used vehicle averages out to $19,589. That makes the mean monthly loan payment $515.
One way to mitigate the high monthly cost of a loan is to save for a car in advance. This will allow you to pay for a larger portion of the car up front, and reduce your loan payment, paying less interest over time, and potentially pay down the loan faster.
Additionally, do research on the most reliable cars ever to find a vehicle that will last beyond the life of your loan.
In case of an emergency
Are you financially prepared to deal with a sudden catastrophe, like a broken leg or a bad medical diagnosis in the span of just a few weeks?
We all hope that we’ll never be faced with severe illness or injury, but it can happen. If your health insurance deductible is high, you could pay several thousand dollars out of pocket before your full insurance benefits kick in.
Emergencies come in all shapes and sizes. For example, if you’re in a car accident, not only will you need to pay medical bills and damages not covered by your insurance, but you may need to hire an attorney. Whether you’re the plaintiff or the defendant, you’ll be grateful for a talented personal injury lawyer to fight for you as well as your reliable savings to cover the unexpected costs.
To cover rent and security deposits
Living expenses in Alaska are no joke. The average rent price is nearly $1,300 per month for a small place, and larger places can go as high as $2,000. The security deposit is typically the same price as a month’s rent, depending on your landlord, and oftentimes you are required to pay first and last months rent up front.
A sizeable amount of money saved away will give you options when you go to look for rental. When something comes open, you can jump on it immediately rather than miss out because you don’t have enough for the security deposit.
Pay for college tuition
California has excellent higher educational opportunities, giving many families the opportunity to seek a world-class education close to home. However, it won’t be cheap. The average in-state tuition for public colleges and universities in California is $14,000-a-year, and it’s even higher if you go to a college in another state.
Whether you’re ready to go back to school or you want to ensure your kids get a quality education, saving for education is an important expense to consider. With the price of student loans skyrocketing, leaving many recent grads with unmanageable payments, saving over many year in advance will put you on a much firmer financial footing.
Retire at a decent age
The average age for retirement used to be 65. If you were very successful, you could retire earlier, with some finishing their careers at 55. However, the average retirement age is getting higher and higher because many people simply can’t afford to quit working.
According to a Northwestern Mutual 2018 Planning and Progress Study, 21 percent of Americans have nothing saved for retirement. A third have less than $5,000 in savings, which is only enough to make it a few months before you run out of money. Unless you want to work until you’re physically unable to do so, taking advantage of compound interest savings, and putting away a small amount every month will allow you more freedom to retire on your own terms.
These tips can help you prioritize what to save for so that you can make the most of your earnings, and have a stress-free life.