Investing for your retirement can seem like a giant in your life. How much money will I need? When will I be able to retire? How much do I need to save today in order to have enough when it’s time for me to retire? But saving today can make a huge impact on your financial future, no matter how small the investment.
Shift Your Mindset
The first obstacle to overcome in saving is your mindset. Viewing saving as an opportunity rather than a sacrifice creates a positive attitude towards saving. This helps you to increase your savings because the long-term effects are more desirable than the short-term satisfaction you’d get from spending that money today. It’s hard to save, but it gets easier. The more you save, and the more you see the amount of your savings accumulate, the easier it will be to continue saving.
There’s no better time to start than now — don’t put off until tomorrow what you can do today. Even if you start small, you will reap the benefits in the future. Start with $5 a day. It may seem daunting and it may not be possible for everyone, but if you are able, it is so worth it. $5 a day will add up to $1,825 over the course of a year! That’s almost $2,000! In 5 years, that $5 a day will be $9,125!
Does $5 a day sound like a lot to you? Well, the US Census Bureau states that the average annual salary in the United States is $35,000. That would make $5 a day only 5% of your income. It’s just enough to jump-start your savings without you feeling a deep loss. Look for unnecessary spending in your day-to-day and instead put it in your savings. Lottery tickets alone cost average Americans $800 per year!
3 Ways to Save More
Overcoming a negative mentality and procrastination alone can positively impact your financial future, but it’s not the only thing you can do. There are three simple lifestyle changes you can make that will help create a healthier financial situation in your life, as well as a happier you!
- Cut back.
Being a savvy saver and an expert couponer will help save you money, but think about the things you can completely cut out. Many Americans live beyond their means, putting value in materialistic things. You know that saying, “money can’t buy happiness”? It’s not too far-fetched! Creating balance in your life, between saving and spending, is healthy. Consider the ways you could save rather than spend. For instance, you could choose to rent an $800 a month apartment, rather than a $1,500 a month apartment. That $700 a month that you save by renting a smaller apartment could be put to better use by investing it! Years later, that $700 will multiply and eventually turn into $2,500 or more.
2. Make more money & invest the increases.
Saving money and being frugal will always be wise decisions financially, but ultimately, the best way to build wealth is to make more money! If you make more money, you can invest more money. You might ask: How can I make more money? There’s plenty of ways, but the easiest would be to start a side hustle or get a raise! This may not be an option for everyone, but it’s something to consider! When you get a raise, you should invest 100% of it, and if you can’t do that, invest 75%, or even 50%! Living on your current income for as long as you can and investing those bonuses will put you ahead. Also, you can increase your 401(k) contributions when you get a raise to further build wealth.
3. Do both: spend less & make more!
What could be better than spending less and making more? Well, doing both, of course!! With this combination, the possibilities are endless. The key is to always save the difference.
Your financial journey is what you make it. Start preparing for your life after work now.
Disclaimer: Do not construe anything written in this post or this blog in its entirety as a recommendation, research, or an offer to buy or sell any securities. Everything in this post is meant for educational and entertainment purposes only. I or my affiliates may hold positions in securities mentioned in the blog. Please see our Disclosure page for the full disclaimer.