Do you cut corners today for building a financially secure tomorrow?

1. Yes; I sleep better at night knowing my future is protected.
2. No; I’d rather enjoy myself today and cross the bridge of the future when I reach it.

If you answered the above question with the second answer you may want to reconsider. Read our advice below to start off slowly saving for your future. 

Don’t invest a penny before you build a substantial savings account.

This might sound counterintuitive to a wannabe investor, but it’s important to have a solid cushion of savings before you start putting your money into the market. Life is full of surprises. You don’t want to be caught in an emergency that leaves you desperate for cash when all your funds are tied up in bonds, CDs, and stocks.

This month, work on building up your savings to minimize risk. Here’s how.

1. Follow the 50/30/20 rule. Financial advisers suggest that 50% of your income goes toward necessities, like your mortgage, transportation, and food costs; 30% goes toward discretionary non-essentials, like dining out, paying for a top-tier cellphone plan, and updating your wardrobe; and the last 20% goes toward savings. If you begin dividing each paycheck automatically, you’ll launch a habit of saving that will greatly enhance your financial life.
2. Put away three to six months of living expenses. Now that you are in the habit of saving, the next sensible step is to put that money toward something substantial. Experts suggest the first step of saving is building up an account that is large enough to cover your living expenses for three to six months. This will tide you over in case there’s an unexpected event that keeps you from earning your regular salary. That may be an illness, your company downsizing, or anything that leaves you suddenly unemployed. Calculate exactly how much you need to live on each month and start saving. Then, even if the unthinkable happens, you won’t be up a creek without a paddle.
3. Build up a series of cash reserves – including an emergency fund. Aside from living expenses, it’s important to have accessible cash for those unanticipated events, like a major household repair or a medical emergency.