Set a retirement goal. Know how much you need to save.
Time is money. The sooner you begin saving, the better.
Example A :
Susan saves $250 per month starting at age 35.
She saves for 30 years, then retires
At 5% interest she will have $208,000 at age 65.
Rick saves $250 a month starting at age 45.
He saves for 20 years, then he retires.
At 5% interest a year, he will have $102,800 at age 65.
Because Susan began saving 10 years earlier than Rick, she has more than twice as much money in her retirement fund!
Here’s how to build that retirement account:
From Money Management and Retirement for Family Child Care Providers by Tom Copeland, available from Redleaf Press.
Get a Handle on Your Money by Reducing Your Expenses and Increasing Your Income.
Strategies for reducing your expenses
Strategies for increasing your income
Understand Ahead of Time the Financial Consequences of Business Decisions.
Too often providers do not carefully consider the financial impact of their decisions before they make them. Whether it’s going into the family child care business to begin with or hiring an employee, buying a car or remodeling your home, providers can make smarter decisions if they examine the financial consequences before acting. For example, you will probably need to care for at least two additional children just to pay for the cost of hiring an employee. Buying rather than leasing a car is more economical, and the less money you borrow to purchase the car, the more money you will save. Remodeling your home may be necessary to provide a suitable play area for children, but the tax benefits of doing so are very minor.
Establish a Retirement Plan.
Most providers are not saving enough to meet their retirement needs. The four major sources of retirement income are Social Security, pensions, earned income, and private investments. No matter what their age, providers should develop a retirement plan:
For more information, see Money Management and Retirement for Family Child Care Providers by Tom Copeland available from Redleaf Press .
Use these convenient tools to help plan for the financial success of your business:
From The Family Child Care Business Planning Guide by Tom Copeland, published by Redleaf Press