Starting to save for your retirement at an early age will not only help you in the future, but will assist in making sure that your financial affairs are run responsibly throughout your life. Many financial advisors recommend starting an early retirement plan rather than waiting until you reach your golden years to start saving.
Here is a simple list of 5 ways in which twenty-somethings can ensure a comfortable retirement in the future.
1. Make Saving a Habit.
When young workers begin to earn a steady salary, they are often obliged to pay off outstanding student loans and making key first purchases such as a car or paying rent on a place to live.
However, it is of most importance that 20- somethings make an effort to save, even if it is just a few Rands each month. A good way to guarantee monthly savings is to have a facility set up that will automatically take money and put in your savings account each month.
2. Live Frugally.
While this may seem nearly impossible to do, with soaring prices of food, petrol and general cost of living, living “below your means” will help in your quest in saving. You want to try and live on less than what you earn, so do not spend over or up to your monthly limit. Be sure to not get yourself tied down in unnecessary debts by opening various accounts that you will not use regularly.
3. Don’t Dip Into Emergency Funds.
If you have never heard of an emergency fund, this is what it is. There will always be a time in life where you will be hit by an unexpected occurrence and you will need to have EXTRA money to pay that off. This is literally your “saving for a rainy day” fund. Financial experts advise that your emergency fund should at least be 3 – 6 times your monthly expenses.
Be sure to save this money in a good investment plan that will yield the best returns and DO NOT TOUCH IT!
4. Monitor Your Spending Habits.
Look at how you spend your salary each month, if there are things that you purchase daily or monthly that are eating into your potential savings, find ways to stop it and make necessary adjustments. By governing non-essential expenses, you will find that there will be more money to invest in multiple schemes, which have the potential to grow substantially over many years.
5. Having Discipline = Being Debt Free.
If you have any sort of debt, organise your finances and pay them off as soon as possible. Having the discipline to squash debts early on is a fundamental principle that will assist in having properly run financial affairs. Speak to an advisor and find ways that can help in formulating way to effectively rid you of debt and to speed up the process of saving for the future.
You do not want life to catch up with you when you reach retirement and learning to have sound financial knowledge and practices will prevent you having to stress later on in life. So, take these tips and employ them now so that you can have a great retirement 30 or 40 years from now!