The ability to save money is a skill that will be useful throughout life, and which everyone should learn. Finance may not be the most exciting topic to explore. But without basic knowledge of how to save money and prepare for retirement, you are more likely to postpone care for a well-deserved rest.
You can start building a solid financial foundation right now. But in order to accumulate enough funds for retirement, you need to start doing this as soon as possible. There are several monetary habits that should be developed by 40 years.
Create financial goals and stick to them
Without goals you have nothing to strive for. If you blindly save everything you can and hope for the best, it is impossible to say whether you are on the right path.
You can have various financial goals, such as accumulating a down payment on your home, buying a new car, creating an emergency fund, and letting your dreams go. But for most people, the most important goal is retirement savings.
This is not an easy task, in part because it is difficult to understand how much needs to be accumulated. Unlike a car or a home, there is no set price tag when retiring. This is an individual goal, so what you need to save can be very different from what your colleagues or friends need to save.
To get a general idea of this goal, enter your details in a retirement calculator. Be as precise as possible, especially when it comes to how much you plan to save each year. You might even want to draw up a retirement budget in advance: the amount you will save each year for retirement determines how much you will need to save.
Once you have a goal, create a plan to achieve it and stick to it. Your calculator can also tell you how much you need to save each month to reach your goal by the time you retire, which will give you a monthly goal to strive for.
If you cannot find so much money, you may have to make some sacrifices in other areas of your budget, because the longer you put off saving, the harder it will be to catch up.
Increase your retirement contributions on a regular basis
In 20-30 years, it is important to allocate at least some money for retirement. But saving for the future is not a put-and-forget scenario. It is important to regularly check your savings and make adjustments to save more if circumstances permit.
It is especially important to increase retirement savings by the time you are 40 years old. This is the so-called peak, which makes this age an appropriate time to increase contributions. Every time you get a raise, you get a bonus or start a new job with a higher salary, contribute a little more to your pension fund.
One of the best ways to increase your retirement contributions without much effort is to keep a certain percentage of your salary. Then when you earn more money, you automatically save more.
For example, you earn 600 thousand rubles. per year, and your goal is to save 6,000 per month - 12% of your salary. We will also say that you get an increase in the future and start earning 660,000 rubles. in year. Continuing to save 12% of your salary, you instantly increase your savings to 6.6 thousand rubles. per month. If you have additional monthly income, you can also increase the contribution rate to 15% of your salary.
Automate your payments
Statistics show that almost every second person at least sometimes pays his bills late. Late payment here and there will not spoil your financial situation, but if you are used to not paying your bills on time, it can immerse you in debt.
An easy way to deal with late payments is to automate bill payments. This ensures that the payment will arrive on time every month, and you can avoid fines and penalties.
Similarly, you can also automate retirement savings. For example, to transfer part of each salary to your retirement account so that you do not see this money and can avoid the temptation to spend it.
Conclusion
Financial management is hard work, but it is one of the most important skills that you must master if you want to have a financially healthy future. Taking the steps of a child and mastering several easy money habits, you can tune in to long-term success.