Saving for Retirement with Little Money

Let’s talk a little bit about saving money when maybe you don’t have a whole lot of extra money sitting in your savings. And as you’ve probably already heard, delaying savings for retirement can be detrimental. So you want to start early and do as best as you can to start building that retirement portfolio at an early age. So let’s walk through eight helpful tips for you to consider. The first, pay yourself first. Even if it’s a small amount, consider the long-term impact of saving for your retirement. So again, when you get that paycheck, go ahead and assume okay, I’ve got to set some money aside for me for the long-run and build up that long-term savings. The second idea is automate the process. So your employer may offer some type of retirement savings plan. And if you don’t have that such as a 401K or simple IRA or anything like that through your employer, then you can always set one up on your own. You can open a traditional IRA or potentially a Roth IRA and have a certain dollar amount withdrawn from your bank account in those examples and have it say, pick the first of the month or whatever date it is and have that start getting invested. The third option, get a company match. Some employers may offer some type of dollar for dollar match up to a certain amount. So as an example, let’s just say if you contribute $1K and your employer offers a match up to that $1K. Now you have $2K in your retirement account. So that is quite the return on investment. If I look at that and say you put $1K in and now you have $2K just based on the contributions and that employer match, definitely take advantage of that. Fourth, analyze your budget. You know a lot of times people aren’t really sure where their money is going. You need to look at maybe your credit card statement every month and sort of see well wait, where did that money go and you start to see some of the holes in your plan. Just as an example, let’s assume you’re going to the coffee shop and getting a $5 coffee versus maybe making it at home for less than .50 cents. Well if instead you just took that $5 each week and found well there’s $20 a month that could be going towards your long-term retirement savings versus coffee. So that’s a basic example to consider. Number five, start saving something. It’s valuable to learn early on to be a saver, even if it’s $5 per week as we were talking about. And then learn the benefits of compounding interest. So if you put that $20 a month aside and after the course of the year, now you’ve got you know $240 that you’ve contributed. But then if you’re earning interest on that money as it goes forward, that compounding effect can be so vital as you build a retirement savings. Another idea is to increase your income. If you get a pay raise then what about setting aside those additional funds into your retirement? So if you get that little bump up in pay, even though I know in today’s world a lot has to do with inflation and the challenges that everyone is facing there. But if possible, find a way to tuck a little extra aside. Seven, leverage windfall. So maybe you’ve received some type of inheritance or it’s pretty common people will find oh, we’ve got a little bit of a tax refund coming in the spring. Well instead of spending those additional funds, what about finding a way to set that aside for your retirement versus spending all that money that you have right then. Lastly, learn how to invest. There are plenty of materials available to you to start educating yourself on retirement. Here’s our shameless plug here. You can go to https://url.us.m.mimecastprotect.com/s/SHEFC2kqwvTAQmOqu8TYU5Qogt?domain=youtube.com. We have a multitude of videos and you can click there and subscribe to our YouTube channel. You can go to our website https://url.us.m.mimecastprotect.com/s/eaFrC31rx2SVv401uzUGUQZSVC?domain=cen-wealth.com forward slash which has a video log of all of these different videos, typically in three, four, five minute clips that will specifically break down for you different areas of retirement planning. Earlier I mentioned the idea, well should I use a traditional IRA or a Roth IRA? That comes down to different tax implications, depending on which one you use. And so again, we offer you those resources or you’re always welcome to give us a call here at Centennial Wealth Advisory. We’re happy to sit down with you and have a conversation.