Charles H. Miller
People in their 20s seldom, if ever, think about retirement. While we can understand that, we do think that everyone — even those in their early 20s — should put some thoughts to their retirement. And we want to help, hence we have prepared the list of basic tips to help them along the way.
If you are in that group, please read carefully. In the big scheme of things, we have a very short period of life on this planet, so let’s make it count. And let’s not carry the burden of debt if we don’t have to…
1. Start saving NOW!
The sooner you start, the better. Yes you’re in your 20s and you may be thinking the life is forever.
Wrong!
When you hit 40, you’ll realize that it’s closer to the blink of an eye. At that time, you will be sorry for not saving more for retirement.
As soon as you enter the workforce, try leaving 10 to 15 percent of your income on the side. Better yet, if your employer offers a 401(k) plan, take advantage of it. You’ll thank us later. (Also read: 5 Major Mistakes to Avoid When Starting to Save Money)
2. Ask for a raise
Don’t be shy about asking your employer for a raise. There’s no other way around it; just don’t do it on your first day/week on the job. Show your worth, earn that raise and then make a move.
It is much easier to save if you have more money, especially if you set a percentage of your paycheck to go towards savings. Speaking of which, you should strive to save 15 percent of your earnings, but if that’s not feasible — go for at least 10 percent.
Then, as you advance in your work, you will be able to save even more with the same percentage letting you put more money on the side.
3. Create an emergency fund
We can’t emphasize this enough, thus we are repeating it throughout our articles. If you don’t have an emergency fund in place, chances are you will use a credit card to pay for some unforeseen bill. That’s what most Americans are doing.
Be smarter than most people by creating a separate fund that will be unlocked when unexpected situations struck, such as when you have to pay for a medical bill or fix your car. Yet again, you’ll thank us later. (Also read: 7 Frequently Asked Questions About Emergency Funds)
4. Repay the student loan
We presume that you’re careful with your credit card spending and that you can put something on the side every single month. If that’s the case, you should be able to tackle some of the debts, like the one you took to fund your studies.
We may be talking about tens of thousands of dollars here, so this could take a while. Then again, it is the same scenario — the sooner you start, the faster you’ll repay it.
Put it all in writing to realize how much money you owe and come up with a plan. Look beyond the minimum payment to see whether you can put an extra $50 per month towards repayment. How about $100? (Also read: 4 Common Mistakes to Avoid When Choosing Student Loan Repayment Terms)
The important thing to understand is that you should first create an emergency fund with, say, $1,000, clear other debts you may have and then go for the big guns. And that would be the student debt.
As we have mentioned before, the sooner you tackle the debt, the better. Retirement may be far off from you current point of view, but time does fly by. So make sure you’re prepared. 😉
