Wes Moss’ 3 secrets to financial security

Certified financial planner Wes Moss provides personal finance advice and accessible investment strategies. His guest blog will appear here every Monday.

Savings 101 – Starting from Scratch

The secret to a lifetime of financial security is really very simple — so simple that American kids once learned it before they even started school.  The Secret:  Save your money.

Americans cast aside that wisdom in recent years as we took advantage of easy credit, racking up record household debt and allowing our national savings rate to fall to an embarrassing 1%.  But saving appears to be back in style.  That’s great news because building a healthy nest egg remains the key to financial well being and the cornerstone of any retirement program.

I have created hundreds of successful financial plans for people ranging from modest wage earners to millionaires, and the key to achieving savings goals is always the same – a consistent household savings rate of 15%.  That’s an ambitious level of savings, but the pay-off is fantastic.  For example, a family with an income of $50,000 needs to save $7,500 a year to hit the 15% target.  If they keep it up for 30 years, while earning even 5% return on their investments, they will have $500,000 in savings.  Along with Social Security, that’s more than enough to live comfortably in retirement!

Of course, the journey to that kind of security begins with a single dollar saved. Here’s how to get started:

1.  Create an Emergency Fund – Before you save a single dollar for retirement or any other long-term goal, you need to amass enough cash to pay for any crisis that might come along – a major car repair, a leaky roof, or a lost job.  Ideally, this fund should be equal to six to 12 months of living expenses.

Being in debt is like being held underwater; it’s scary, and it limits your options.  Once you have established your emergency fund, focus on cleaning up those credit card balances before you resume saving.

2. Prioritize Saving – If you don’t think you can afford to save money, you need to change your thinking.  Try this: Decide how much you need to save each month and deduct that amount from your net pay – just like taxes and Social Security are deducted.  Consider having your savings contribution automatically transferred from your checking account into a savings account with an on-line bank or credit union, where interest rates tend to be a bit higher.

The money that’s left over after you have “paid” your savings account is available to meet your other needs and wants.  This process might force you to make some hard choices about your spending or consider ways to boost your income.  That’s one of the great side benefits of committing to a savings plan – it makes you pay attention to your money and your future.

3.  Use Savings Supplements – Put the retirement portion of your savings in a 401k plan or similar program that boosts your return with employer contributions and tax benefits.  If your employer doesn’t offer such a plan, put your money in an IRA where it will grow tax-free.

Whatever your plan for saving, it’s important to start now. Time is a powerful ally.  Open a savings account, start an IRA, or stick $20 in an envelope under the mattress – just get started and stay consistent. As the timeless proverb says, “Money grows on the tree of patience.”

Wes Moss is a certified financial planner and is the Chief Investment Strategist at Capital Investment Advisors in Atlanta. Moss is also the host of “Money Matters” on AM 750 and now 95.5 FM News Talk WSB on Sundays from 9 a.m.-11 a.m. An author, “Apprentice” alumni, husband and father, Moss is committed to helping Atlanta’s citizens with financial health.

Follow me on Twitter @atlbargains or on Facebook at AJC Atlanta Bargain Hunter

13 comments Add your comment

Jennifer Brett

September 13th, 2010
8:15 am

Save 6-12 months of expenses and THEN pay off credit card debt? That’s the opposite of what Dave Ramsey teaches. He advises a starter $1K emergency fund, then pay off all debt, smallest to largest, and then building up 3-6 months of expenses. Why would you advise banking up to a year’s worth of living expenses before attacking credit card debt? If you’re paying 18+ percent on your credit card balance and earning less than 1 percent on your savings account, that really makes no sense. BTW I am completely debt free but the house and have long ago cut up the credit cards…thanks to following Dave Ramsey’s advice.

Daniel Schwartz

September 13th, 2010
8:29 am

Americans need to take this advice to heart and begin depending on themselves and not anyone else (government) to support their retirement!

Chris Bohlmann

September 13th, 2010
9:01 am

Dave Ramsey’s advice is okay for some, however, it is not that credit cards are bad,it is the irresponsible use of them that is.


September 13th, 2010
9:09 am

Other than buying a house to live in, interest is something you EARN not something you pay. Try to get interest on your savings (it very hard now, CDs at 1%).
Paying interest to buy a car or clothes because you put them on a credit card or payment plan is dumb. Save up first then buy it. No interest to pay and you earn a little bit while you are saving.


September 13th, 2010
9:27 am

Dave Ramsey has too much $$ for his own good. Any person with common sense can budget and save and payoff bills, for good! You can also take FREE seminars at any credit union offering them, with NO membership. He needs to quit charging a ___load for his seminar and taking money from those who can’t afford to go anyway! Crook!

Wes Moss

September 13th, 2010
9:44 am

I agree with most of Dave Ramsey’s system…but for any family $1000 isn’t enough of a cushion.

The emergency fund…whether it’s 6 months or a whole 12 months…is the protection that every individual or family needs regardless of their debt situation.

Several months’ worth of liquid spending money will help you SLEEP WELL AT NIGHT, establish the discipline of savings, and give you peace of mind as you budget to eliminate looming credit card debt.

Daniel Schwartz

September 13th, 2010
10:00 am

You can shop around and consolidate some cards to 0% rates. You can buy yourself some time and pay them off gradually over time. This way you can save and earn less than 1% and still be doing better for yourself than immediately paying off cards that don’t carry interest rates.


September 13th, 2010
10:24 am

For a young family saving 15% seems a little high with expenses of childcare, mortgage, etc. I hope we can get to the point where we can save 15% or else we will be working forever! If Atlanta schools weren’t so bad then we could send our kids to public school, which would be a big help!

Wes Moss

September 13th, 2010
10:32 am

I know 15% sounds like a lot for a young family. And an emergency fund for 6-12 months sounds like a lot too. Nobody ever said savings was easy; it’s a monumental goal.

But think of it just like batting practice… you have to do it season after season until it becomes second nature. And as hard as it may sound, I see people making it happen everyday.

Andrea Rizk

September 13th, 2010
10:49 am

If you lose your job, you have NO money coming in. This means no only can you NOT pay your high interest credit card debt, you also can’t pay your rent. Dave Ramsey’s suggestion of $1000 wouldn’t cover most families for more than 15 days. Rent/mortgage, car payments, insurance, school, daycare, etc. are considerably more than $1000 of savings can cover. Save first. Skip Starbucks. Shop at TJ Maxx instead of Macys. Find simple ways to start your emergency savings fund now. It’s time to take responsibility for our financial emergencies.

Real Person

September 14th, 2010
10:22 am

Wes is just the pretty face to replace Mike Kavanagh (and really? The Apprentice with Donald Trump?)

This is hack advice – people would do better to buy “Everything I Need to Know I Learned in Kindegarten”


September 14th, 2010
4:11 pm

I don’t see how this can be construed as hack advice. Basic? Absolutely, but 100% prudent advice for average earners / savers. Instituting a disciplined savings program, seeking safe but incremental yields and maxing out employer contributions is a great foundation for establishing emergency reserves and planning for a successful retirement. Sadly, given the low financial IQ of most people in this country, many need to go back to Kindergarten.

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