Simple habits to save for your retirement
As you reach a comfortable position in your company and your children start supporting themselves, retirement may seem like your next plan of action. Saving for retirement can be a real daunting task, as you stop receiving a monthly income and remotely live off your bank account. Not knowing where to begin is a real issue, as the huge amount that you have calculated may seem completely out of reach. However, fret not as we have got you covered. Here are some simple tips that you can do to make the whole process of saving up a lot more manageable and less intimidating.
Lock your savings in
In order to stop yourself from spending unnecessarily on big-ticket items as you start saving up for your retirement, locking your savings into retirement plans may be the best solution and probably a great first step to your plan. These payments come out directly from your income, and you are able to determine how much you want to contribute per month so that you do not find yourself struggling to meet end's meet. You can also utilize other pre-tax saving methods like health savings accounts (HSA) or Individual Retirement Accounts (IRA) that use the same approach to help you meet your financial needs when you retire.
Apart from these accounts, you can also take advantage of a contribution rate escalator tool that is normally offered by your retirement plan provider. These tools help you increase your automatic contributions by any amount that you are comfortable with; helping you reach your goal faster. Another alternative you can consider is to use a debit card to round up your purchases and put that amount in a savings account separate from your normal spending account. This way, you can make sure that money is slowly going into your retirement fund, helping you prepare for your future. If you do not want to formally set up an account, you can also engage in self-directed savings by putting in money daily into your piggy bank, though it will not be the most effective. You can even consider investing your savings in stocks, gold, or other alternative retirement investments such as precious metals that could help you save a lot.
Don't get distracted by debt
Outstanding debts and fees that you owe to the bank or people can be a great obstacle in helping you save up for your retirement. Instead of setting aside your extra cash for your retirement fund, you may have to focus on paying off your debts. In order to not get sidetracked from your retirement plan, consider turning to debt reduction plans to make it more manageable for you. While there are certain types of debts that are much easier to take care of, like mortgages and student loans, other types like credit card debt, high-interest personal loans, and auto loans can create a vicious cycle and make retirement seem impossible. Therefore, cultivating simple habits like creating a personal spending plan, paying off credit card balances in full every month, and making purchases in cash instead of a credit card can help you reduce your spendings and increase your disposable income to clear off your debt. Ensuring that you progressively reduce your debt will help you focus on your retirement plan in due time.
Cultivate good financial habits
Developing good financial habits is one way to make your retirement plan seem more manageable and in reach. One common pitfall that individuals are prone to do is spending and “treating themselves” after successfully paying off a loan or debt. While this is acceptable when done in moderation, it can also cause you to develop a habit to spend every time you receive a little extra income and increase your disposable income. Instead of spending it on the bag that you have been eyeing or the new car that you have always dreamt of, it is highly recommended that you “spend” this extra cash on your IRA account, and lock it in before you buy something in impulse. Cultivating good habits like these will prevent you from creating bad spending patterns, making your plan towards retirement much more difficult to reach. Furthermore, maximizing your debts or loans like keeping your car for a few more years after paying off the auto loan will help you make it more worth it.
Cook your own meals
While this may seem totally unrelated to your finances, cooking your own meals and cutting down on takeaway food can help you save more money than you think. Spending on groceries instead of buying takeaways is so much more worth it, and the same amount of money spent on five meals can typically be spent on two weeks worth of groceries. You do not have to be a Michelin star chef to whip up your own meals, as there are many easy to follow and quick recipes available online — so you just got to be creative with what you cook! The money that you save from dining in can contribute significantly to your retirement fund while making sure that you eat more cleanly as you are in control of the ingredients that you put into your own meals. This could potentially translate into lesser health problems, thereby helping you save on the hefty medical costs in the future as well.
Use automatic bill pay
Tired of keeping up with your payments and getting sick of paying extra due to the incurred late payment fee? One solution would be to opt for an automatic bill payment to help you reduce late payment fees which could result in accumulated savings in the long run. This not only helps you to save on extra incurred fees, but it also saves you the trouble of making a mental note to pay your bills on time. Furthermore, since paying creditors on time is a major factor in determining your credit score, paying on time will help you lower future borrowing costs for vehicle loans or mortgages, making your life a whole lot easier.
These are some simple ways to make your retirement plans much simpler and achievable. While you are not expected to set aside 70% of your monthly income for your retirement, these steps take a lot of self-discipline and determination in order to make this work. As long as you diligently make the effort to save up for your future, your stress-free and relaxing retirement life will be ready to welcome you with open arms in no time.