Let’s admit it. Except for a rare few, no one under 30 seriously thinks about enjoying their retired life right now. However, if you start taking control of your personal finances by investing in good opportunities and assets as soon as you start earning, you are guaranteed to be financially secure by the time the retirement inevitably rolls in.
‘Live like today is your last day’ may work from a philosophical point of view, but never in the case of finances. Those who fail to plan their finances will always end up stressing about their financial security during their later years. The good news is that by following 8 easy steps, you can take control of your finances and retire without any worries. Read on to know how
#1 Have a balanced spending habit: Just like striking a balance between work and personal life or family and friends is important, you should have a balance between what you spend now and what you plan to spend in future. Once you are clear about the money you need in future, you will have a better idea on how much needs to be saved today for a brighter tomorrow.
#2 Remember to Nurture your skills: The world is a demanding place. Sharpening your skillset and increasing your specialized knowledge will help you to stay employed for as long as you need, and retire in luxury. Not only will this help your career take off, it will help you to make more money as well.
#3 Have a goal: Writing down your goals and making clear plans to achieve those goals are the two things that separate the wealthy retirees from the rest.
Have both short term and long-term goals. However, make sure that you keep reviewing or resetting those goals based on the changing circumstances.
#4 Pay yourself first: Your expenses may keep spiraling out of control as you get older – a new car, home, or bringing up your family. But having an automatic monthly contribution set up for your 401(k) or Roth IRA as soon as you start earning will ensure that your savings will help you tide over even after retirement. Automatic payments also help you in controlling your expenses and avoid committing to bad financial decisions.
#5 Keep learning about finance: Having the financial literacy can help you make sound financial decisions. The more you become knowledgeable about good investments and personal finance, the more wealth you will create.
#6 Take Calculated Risks: The rewards usually varies based on the risk. So, don’t always play it uber-safe. Instead, be open to taking calculated risks. This should be done not just in investment, but also in your jobs – like changing your location, going back to college for an advanced degree, switching your company etc. The rewards may be worth the risk.
#7 Think before you borrow: Borrowing money for funding your lifestyle is radically different from borrowing money for investing in a sound business proposition. Always think twice before you borrow money. The borrowed money should either give you more leverage like a better education, or significant gains.
#8 Keep an eye out for freebies: Be it the employer contribution in your company pension fund, or tax savings from IRA, keep an eye out for the various freebies and take advantage of them.
Always think twice before you sink your money into buying assets, as the returns from them can either help you tremendously or the losses from them can cost you a peaceful retirement. On the other hand, Investing in good businesses or stocks usually helps in improving your personal finances. At any rate, your finances should always be carefully monitored for creating and sustaining wealth!