Most people working in first real job have a lot on their financial plate. Gone are the days of working part time while going to school, or just for pocket money in the summer, and here are the days of buckling down and starting your professional path. This is an exciting time, but it can also be a stressful one, especially when it comes to thinking practically about retirement.
It is hard enough to manage the cost of finding a place to live, perhaps paying for a vehicle, putting food on the table, much less luxuries like cable TV! If you are supporting others with that first paycheck other than just yourself, this stress and pressure grows and grows. Despite all this pressure, you need to begin retirement planning with your first job. The financial world is changing, we all need to be responsible for our well-being in our retirement years, and unless you want to work until you are 90 years old, you should start saving early.
Things You should Thinking about While Working
This may seem tough when you count every dollar, but it is absolutely doable, and these are some strategies you can use to make your retirement savings a source of pride and not a source of stress. Save a little, save it often, save it automatically. One of the benefits of starting your retirement savings early is that you don’t have a ton of pressure to save it all at once. Set aside 5% of your paycheck into a savings account. Often times this won’t result in more than $20 per pay period, but over the course of a year that really can add up.
Most employers offer a direct deposit option, and within that direct deposit option you can ask for a certain amount to be put into a savings account and the rest into a checking account. By removing the step of saving it yourself, you are less likely to be tempted to skip saving it At the end of the year, that savings account will have a nice little chunk of change in it. Meet with a financial advisor and use it to invest in some long term savings that will reap big rewards. Partner with your boss. Most reputable companies offer some sort of retirement savings incentive.
How To Save On Taxes So You Have More To Retire With
This is a really great option, as it will allow you to set aside money BEFORE taxes, allowing your small chunk to be just a little bit bigger! Some companies will even offer a retirement savings MATCH, matching the amount you save up to a certain percentage, again, tax free. This increases your impact on your savings, does so without effecting your bottom line any further, and shows your boss that you are serious about long term planning!
The power of interest. By starting to save early, you invoke the power of interest! Simply put, the longer your money sits in savings, the more interest in accrues. That interest then rolls into the principle, which, in addition to the new savings you add, increases the amount you earn interest on Money that is saved early will nearly triple in value by the time retirement is reached, and the more you save the more you make! In short, saving early isn’t always easy. There are always things to spend money on, both essentials and fun. But, more than ever, the money you save early in your career has the greatest chance of growing. Buckle down and save, it will be worth it!