It easy to understand why retirement isn’t a priority in your early stage of your career. You’reMore concerned in kick starting your career rather than ending in distant future.
However, being young gives you an edge if you want to build wealth for retirement. You have time to take advantage of compounding interest, so you can save a little now and reap big rewards later.
Don’t pass on the opportunity to get a jump-start on saving for retirement.
Here are some tips for Jump start your retirement planning early.
Tip 1: Have a Plan
The first mistake most people make is they lack a written plan to build financial security.
You can’t put the formula for financial success to work for you without a plan to accomplish it.
It may be a simple process, but it won’t happen randomly. You make it happen by taking action. A written plan with goals provides the road map and is a necessary first step.
Financial success is a choice. It results from the many small decisions you make each and every day. Without a plan and goals to achieve wealth, your life is like a sailboat without a rudder: it just spins in circles without definite direction
Tip 2: Pay yourself first.
This priceless wisdom was first introduced in the classic book Richest Man in Babylon by George S. Clason and simply says that whenever you have any income coming in, you should set aside a certain percentage for yourself first. This needs to be applied toward retirement as well, and either begins with taking advantage of your employer sponsored 401(k) or opening an IRA (Individual Retirement Account) and setting up automatic contributions. This way, saving for retirement becomes a habit and automatic.
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Tip 3: Control you’re spending
I know this isn’t rocket science, and in no way am I trying to insult your intelligence, but the less you spend, the more you’ll have for savings. Controlling spending isn’t just about savings; it is also about investing money wisely. When you work hard for your money, it is instantly gratifying to spend it.
Controlling spending now will enable you to create your future nest egg. Also, to be clear, controlling spending doesn’t mean that you can’t enjoy your hard earned money now; it just means that you do so intentionally.
Tip 4: Invest in your Financial Education
Before you start earning you must learn about the financial product.
Similar to the earlier concept of controlling spending, getting out of debt will also provide more money to save for retirement. The money you are paying your bank in interest on your debt or loans is money that could be going into your 401(k) or retirement
This is critically important because financial intelligence cannot be developed overnight any more than wealth can be accumulated overnight. It takes time and disciplined effort.
The earlier you learn your lessons, the less they will cost you. You’ll gain experience on smaller investment decisions, where mistakes can be offset by new savings.
The longer you wait to learn these lessons the more they will cost you. That cost comes in the form of years of missed opportunities and mistakes made with big investment decisions later in life that can’t be offset by savings.
There is nothing more financially dangerous than an investor making a million dollars’ worth of decisions with a thousand dollars’ worth of financial intelligence.
Tip 5: Get out of debt.
Similar to the earlier concept of controlling spending, getting out of debt will also provide more money to save for retirement. The money you are paying your bank in interest on your debt or loans is money that could be going into your 401(k) or retirement account. So you are losing the amount you’re paying in interest, but also the amount of money that you could have been making if that money was invested.
Granted, not all debt is created equal. If you have student loans or a mortgage, those items are considered “good debt.” However, if you have high-interest credit card debt, you need to rid yourself of it as soon as possible.
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