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Those who are currently living in their 20’s are full of opportunity and youthful energy. The last thing on a 20 year-old’s mind is how they should begin to save for retirement. It may be a bit financially strenuous to invest a large amount of money into retirement so young but there are small steps to take to begin a foundation of savings to set yourself up for a great retirement.
Start Small
One thing that many young people do not do is track their daily expenses. There are many different ways to track expenses. Many use a simple spreadsheet on their computer or use an app to track how much income they are making to how much their expenses are taking from their finances. Utilizing a visual representation of your finances is an easy step to begin to understand good practice when it comes to saving.
Another great way to maximize your chance to an early retirement would be to save as big as a percentage of your income as possible. Many who seek to retire early attempt to save up to over 50% of their income. As well, try and make as much income as you possibly can. Find different avenues to increase your income because no matter what you will never get your expenses to equal zero. The one factor you do have control over is how much revenue you are generating on your behalf.
The sooner you begin saving, the sooner you can retire. One can save hundreds to thousands of dollars more over the course of a long career by beginning to save in their 20’s rather than waiting until their 30s. Opening an IRA, whether a Roth or traditional, is another great way to begin preparing for your future.
Once you have created a strong foundation of which you can save from, it is also just as important to maintain your contribution to these accounts. Starting an IRA for someone in their 20’s can make or break a secure retirement that can be financially stress-free.
Not only does the start of creating a retirement plan early on make a strong foundation for life after your career, it starts good habit forming in regards to saving. Those who begin to save in their 20’s can become much adept in managing finances throughout their 30’s and 40’s. Once you have started managing your spending and investing, it is hard to ignore the importance of it.