stow away $15,000 a year. At a time when the average person can expect to live longer, yet can’t really be sure just how much they’ll get in Social Security, saving 20%-25%, if possible, might be a good idea.
Let’s be matter-of-fact. A lot of us don’t have the means to be model savers, salting away a fourth or more of our salaries. Take 40-year-old Joyce Stone, for instance, a Los Angeles single mother of two. After six years of marriage, she divorced her husband and father of her seven-year- old son, Darius. Stone also has another son, Ramziddin, 18, by a previous relationship. At the time, saving just wasn’t an option.
Stone found her bills stifling and declared bankruptcy in 1994. In 1995, she started working as an executive associate to the chief information officer of LACare Health Plan, a nonprofit overseer of managed care health plans to Medi-Cal beneficiaries. Since then, Stone has been working diligently to get back on her feet. But it hasn’t been easy; up until two months ago, her resources were strapped.
She receives no child support for her oldest son, but when an older brother passed away, he left a small inheritance to Stone’s mother. Her mother has since passed it along to enable Ramziddin to attend Saddleback Community College in nearby Orange County. Joyce does get under $300 a month in child support for Darius from her ex, now a financial consultant for a Beverly Hills investment firm. But it’s not enough to cover the $320 per month to send him to a private Christian school plus other expenses. “My biggest financial challenge is trying to meet my oldest son’s college costs and provide him with some pocket money since he doesn’t have a job or a scholarship. For my youngest, it’s providing him with recreational and after school extracurricular activities and being able to cover their costs,” she explains. “My needs are very few; I don’t have a problem wearing old clothes,” says the former legal secretary. Stone, who makes about $40,000 a year, says her financial goal is to save a little at a time to build a nest egg for her children’s college costs and her retirement needs. She now manages to put away $360 a month between a credit union savings account–where she’s saved about $2,000–and her employer’s 401(k) matching plan. The combination is just shy of of her monthly savings plan to tithe to herself. She also tithes to the church.
RISK: IT’S A QUESTION OF STYLE
One of the first things the Fieldses came to grapple with was the notion of different investment styles. They both agree on financial goals, but in setting up a plan, they soon realized that they subscribe to radically different investment philosophies. So, while the couple holds their core retirement assets in mutual funds, “Beyond that,” Donna explains, “we manage our finances separately.”
All along, Donna’s goal has been to learn how to take calculated risks in order to boost her returns. To that end, she