It’s not fun to have to think about retirement savings in your 20s, but boy is it necessary. As inflation rates change and pensions become more rare, thinking about the future now is mandatory if you want to live comfortably without working in your mid-60s and beyond.
Figure Out Your Needs
Here are 4 things you can do to figure out how much you need and how much you’re going to need to save to get that much.
1. Estimate your future spending
Estimating your future spending is very similar to estimating your current spending. But take into account what expenses you will and will not have in the next few years. Will your mortgage get paid off? Will you have any long term health costs? Will you want to travel? Find an online calculator that can help you with your numbers.
2. Estimate your retirement costs
Find an online calculator also to help you calculate your retirement needs: your monthly expenses, savings goals, retirement age, etc.
3. Make a plan
Write down—even if only on a single sheet of paper—the goals you’ve established to help hold yourself accountable.
4. Keep at it
Things change. Life changes. Keep revisiting your plan to make sure it’s up-to-date and stays relevant enough to actually deliver what you need.
Aim Sky High—Think Millionaire
So we’ve covered how to start thinking about saving and putting a solid plan in action. But we know you want to save lots. Millions, ideally, right? Here are 5 tips to get you started on the path to total financial comfort.
1. Start ASAP
The earlier you start, the more you’ll end up with in your war chest. Imagine what would happen if you upped your monthly savings number over the course of your lifetime? The number really really adds up.
2. Avoid debt
Be smart by avoiding student loans and credit card debt. If you do accrue unavoidable debt, make sure to pay it off snappily as possible. You’ll save a massive amount of money without even noticing. And always think through the financial repercussions of major life decisions.
3. Invest slowly
Don’t dump all your excess money into high risk/reward ventures. Slow and steady wins the race. Think 401k.
4. Generate multiple incomes
The more money you bring in, the more you’ll save and the faster you can pay down your debts and start pumping any extra funds into your wealth creation.
5. Live frugally
Every time you go to spend money on something, rethink that cost in terms of other things. How many lattes turn into a trip to Paris? A new fall coat? How many fall coats turn into a Ferrari, over time? Cut as many corners as you can and you’ll be surprised at how quickly you gain financial control of your life and your future.
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