Even if retirement is a long way off, you should be thinking about saving for your future. Compounding can grow your nest egg, and the sooner you start saving, the better. Make saving for retirement a top priority, even if you have a modest income.
Reduce Your Expenses
Eliminating unnecessary or wasteful spending and paying off debt can free up money that you can put toward retirement each month. Many people don’t realize how much money they waste on subscriptions they don’t use or how much they spend on restaurant meals and coffee.
Track your spending for a month and write down where every dollar goes. That can help you identify patterns and areas where you can reduce your spending.
If you have credit card bills or other debt, work on paying it off. Once you eliminate those balances, focus on not accumulating more debt.
Maximize Your Income
If you’re looking for a new job, consider a company’s entire compensation package. If two businesses offer the same salary and one offers a retirement plan with a match, the one that will help you fund your retirement can be a better option.
If you started saving late or you only saved a small percentage of your income, you may not be on track to meet your retirement goal. In that case, you should focus on increasing your income. You may want to pick up a part-time job or freelance work to earn some extra money. Even if you only work a few more hours per week, money that you earn from a side gig can have a substantial impact on the balance in your retirement account.
Put Extra Funds Toward Retirement
If you receive a monetary gift, a bonus, or an income tax refund, resist the urge to use those funds for a vacation or a new car. Put that money (or at least a large percentage of it) toward your retirement.
If your income rises in the future, don’t think about how you’ll spend those extra funds. Look at a raise as more money that you can put toward your retirement.
Make Automatic Contributions
If you pay your bills first and then try to find money to put toward retirement, you may wind up saving little or nothing. Paying yourself first can help you meet your goal. Ask your employer to take a predetermined amount out of each paycheck and automatically transfer it to your retirement account. Not having access to that money will help you avoid the temptation to spend it.
Get Started Today
The thought of saving for retirement can seem overwhelming, which is why many people put it off or never get started. Taking a small step in the right direction is better than not acting at all. As saving becomes a habit and you see your balance grow, you can look for new ways to reduce your expenses or earn extra money that you can put toward your future.
