Disclaimer: The below is solely intended for informational purposes and in no way constitutes legal advice or specific recommendations.
When people plan for retirement, they’re often thinking about all the places they’ll travel to or the passion projects they can pursue in their newfound free time. In addition to the “fun stuff,” you may want to seriously consider the money you’ll need to maintain your day-to-day lifestyle without a steady paycheck. All that starts with smartly managing your finances now, so that you do not encounter any unpleasant surprises later.
Managing Your Savings And Debt
If you recognize behavior that includes impulse purchases and paying no more than the minimums on credit cards balances, you could be setting yourself up for failure with poor financial habits. As debt grows, you’re even less likely to set money aside for your retirement savings account.
No matter how close you are to retirement age, there are some steps you can take now to get your finances in order. Start paying down your credit card debt by putting as much money as you can into your lowest balance until it’s fully paid off. Then, only use a credit card when you know you can pay off the balance in full.
Once you’ve paid down each credit card, take whatever money you were paying monthly to those credit cards and start putting it into your savings account. If that isn’t possible, try to set aside $25, $50, or whatever you can afford from each paycheck and deposit within your savings account only.
Another way to help you save money is to create a budget you can follow. Run the numbers to figure out how much money you need for mortgage or rent, monthly bills, groceries and gas, and other necessities. Then take what’s leftover and set aside a percentage for your savings account. Once you have a final figure, give yourself a daily, weekly, or monthly allowance, and this will help keep you on track.
Tips For Saving And Growing Your Nest Egg
Having a healthy savings account is one step in the right direction, but you’ll need to do more to ensure you’re set up for retirement. According to Matthew Frankel of The Motley Fool, investing is an important step in growing your money in preparation for the years you won’t be working. A 401(k) and IRAs are good, but you should also consider putting a percentage of your savings into stocks and bonds. These assets can help you get cash flow over short or long-term periods.
While stocks are riskier than bonds, they’re also one of the most reliable for earning you a decent return on investment. Generally, the younger you are, the more your invested money should be in stocks, and the older you are, your money should start shifting more to bonds.
How Your Past Can Affect Your Future
When you fail to plan, you plan to fail, as the saying goes. If you don’t take the necessary steps to financially plan for your retirement, you could be facing large medical bills, monthly expenses you can’t afford, or bankruptcy. What you do in your past can affect your present and your future, whether that’s maintaining a high level of credit card debt or not saving for retirement. So, do what you can now to provide for a better future.