Investing in Your Future

Savings jarPlanning for the future can often be more terrifying than any horror movie. The future is a large part of our lives though. Let’s talk retirement.

On average, Americans spend 20 years in retirement, and as time goes by people are living longer so 30 years is what most planners use today. Have you calculated what you need for retirement? The odds say you haven’t, as less than half of Americans have calculated what they need to save to have a secure retirement plan. The facts are, saving can be scary and planning is easier said than done. It’s easy to find yourself saying that you’ll start saving when your life is more secure and stable. News flash: There will always be competing demands for your money. Your life will always be something to save for, pay off, or to tempt you to splurge on. There is never a financially perfect time to start saving money.

The first step for investing in your future is to start saving. No excuses or procrastinating; the time to start saving begins now. Even if your budget allows for meager savings, practice makes perfect and it is time to get started! Setting up an automatic transfer to savings accounts is an excellent way to begin learning how to save. When you begin adjusting to having less, you create the practice of saving and you can increase your savings with pay raises and set aside bonuses. If your budget allows it, experts suggest savings in a rule of minus ten. If you are in your 20’s you need to save 10% of your income, in your 30’s you save 20% of your income, and so on and so forth.

Don’t let the rule of minus ten intimidate you. Even if you can’t meet that goal, everyone has to start saving somewhere. Save as close to that number as you can for optimal results that accommodate your lifestyle. Once you have developed the habit of saving, it is important to do your research for how much you need to save to have a secure retirement. From retirement planning websites to financial advisors, the world is at your fingertips with resources to aid you in obtaining this information in a way that suits you best. Once you are aware of what you need, you can begin to make a savings plan to meet your individual needs and desires for your future.

Although you can (and many have) write a book on the different ways to invest, allow me to touch upon the more simple ways to save. You would be hard pressed to find someone in the workplace who has not heard of a 401(k). A 401(k) is a company sponsored plan that provides employees with automatic savings and tax incentives. And sometimes the company will match what is saved. Individual Retirement Accounts (also known as IRAs) are another common way of investing for the future. They are individual savings accounts that allow you to direct pretax income towards investments that can grow. There are also Roth IRAs that are similar to the other two except that what goes in has already been taxed. So when the money is taken out, there are no tax deductions or surprises. In addition to putting your money in safe ways to save, there are also the higher risk, higher reward ways to save in regards to portfolio investments such as stocks and bonds. Stocks and bonds allow for investments that can fluctuate based upon the stock market or interest payments.

One of the biggest aspects to investing in your future is being practical and pragmatic with your finances. Setting aside money every month is essential, but there’s more to it than saving for retirement. Having an emergency fund in case something goes wrong will be a blessing when the time comes. There is much of life you cannot plan, being prepared for what you cannot expect will take away some of that extra stress. If you can spare it, financial experts suggest having three to six months worse of expenses saved for emergencies.

Avoiding debt is imperative to investing in the future as well. Make an effort to not use and abuse credit cards and to work steadily on paying off student and other loans. Debt can build rapidly and quickly take away from your investments. Above all, don’t touch your savings accounts. Let them sit and compound interest. Keep your emergency funds for emergencies and allow your savings to marinate with interest over the next few decades. You’ll thank me later.

Planning for the future doesn’t have to be terrifying. Retirement doesn’t have to be a threat of living in poverty for the last twenty years of your life. The quicker you can start saving, the better. As you come into your own, eventually the amount you can put away will increase. Managing your finances is like learning to increase your workout stamina. For awhile, you’ll be miserable, then one day you’ll notice it’s not nearly as difficult and you can push yourself even further. Invest in yourself, plan for the future, never be afraid to ask for help, seek assistance from knowledgeable financial advisors, and let that interest grow. The sooner you begin saving for your future the sooner you can turn a secure future into your secure present.