For some, saving for retirement may feel like going on a dental appointment for extraction. But the sooner you start saving for future funds, the better off you’ll be when the time for retirement finally comes.
Yes, it’s true that boosting retirement funds seems difficult if you can’t produce more money or radically cut your budget. However, that doesn’t mean that it’s impossible.
Let’s say you have a full-time job, and your company is offering you a 401(k) plan that matches a percentage of your contribution. Awesome! Now you have a spare money. You can go back to eating lunch.
But what if you’re like many workers today, whose employers offer a 401(k) plan either with no match and high fees – or worse, nothing at all. Maybe you’re working as a freelancer or a part-time worker, and dependable pension plan or benefits package is off the table. What now?
Don’t Rush it. To begin with, investing in retirement funds should not be rushed. People with debt burdens at high interest rates – hello, student loans – should pay off that debt first to avoid souring credit scores and escalating fees. If cash flow is tight, paying rent and buying daily necessities like groceries should take priority.
As an advice, you should spend your money renting a good place nearby your workplace. This will give you flexibility, less stress and more room for savings in comparison to rushing with property purchase. However, getting your own place is a surefire long-term savings. Many house for rent from McGrath offers great prices at multiple locations, which will suit your personal and work requirements.
Save “surprise” money. Every now and then, our financial fairies give us a gift. Whether it’s an unexpected bonus, a large tax refund, or even a surprise inheritance, you can use the bulk of the money to increase your retirement nest.
If you have a stable finance, you may want to stash the extra money in a traditional IRA, or even in a taxable investment account that’s designated for your retirement funds. Those who carry a credit card balance can use a windfall to pay off the pesky bills before shifting the money that was going to debt payments to retirement. You can even shore up your emergency fund so you won’t be tempted to spend your retirement accounts when you felt the need to splurge.
Invest your raise. The problem with us is that the more we earn, the more money we spend on things that we clearly don’t need. That new “balance hover board?” Seriously?! Serving a portion of your raise rather than spending it all will help you avoid lifestyle creep. That means you will need less money when you stopped working since you’ll be used to living on less. Professionals agree that a person who saves half of their yearly salary will find it easier to accomplish their retirement goals.
Live within your means. This one’s a practical approach. Living within your means simply suggests that you should purchase things that’s within your income level. Doing otherwise will make you wake up one day with an unfathomable credit on your name. You don’t want that.