The Money with Katie Show Emergency Fund, 401(k), Down Payment: Saving Too Much...or Not Enough?
Sep 16, 2024
One listener wonders if she's over-saving for retirement while also trying to buy a home. The hosts weigh the pros and cons of balancing retirement contributions and short-term goals. They discuss the power of starting savings early and how compounding can lead to significant wealth. Emotional aspects of saving versus enjoying life are also explored, alongside tips for a healthy financial mindset. Finally, they tackle the complexities of unexpected wealth, like inheritances, and how to plan effectively around such surprises.
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Early Financial Priorities
- Prioritize employer 401(k) matches for the 100% ROI.
- Build an emergency fund before major savings goals like a house down payment.
Roth vs. Down Payment
- Consider Roth IRA contributions valuable, especially early in your career, due to tax-free growth.
- Prioritizing Roth contributions over a down payment in a pricey market can be beneficial.
Balancing Savings Goals
- Split savings between long-term goals like retirement and shorter-term goals to avoid imbalance.
- This approach helps address potential stress from neglecting either goal.