4 Ways to Help Save for Retirement in Your 20s
When you’re in your 20s, living paycheck to paycheck and thinking about paying your monthly rent and credit card bills, retirement might not seem like an urgent priority. But if you begin saving early, you may be able to get ahead on your retirement savings earlier than you thought.
Saving for retirement begins by taking some small steps now to help curb your spending, but you don’t necessarily need to forfeit your lifestyle when making these responsible financial decisions. Here are four ways you can better save for retirement in your 20s:
1. Start a Retirement Account
Though retirement may be decades away, if you start saving in your 20s, you have more time for your money to potentially grow, says Forbes. If your employer offers a 401(k) program you may want to consider signing up and contributing as much as you can, says U.S. News and World Report. If your employer, doesn’t offer a 401(k), consider looking into other retirement options independently like an IRA, says Forbes.
2. Keep Living on a Tight Budget
Although you have a steady paycheck, you may still want to live as frugally as possible during your first few years out of college. Instead of furnishing your apartment with brand-new items, consider thrift shopping or going to other discount retailers. And, you can check with friends and family to find out if they have any unneeded furniture or decor they want to give, lend or sell to you at a low cost.
Besides being cost-conscious with your apartment furnishings, you may want to set up a monthly budget. Having a budget will not only help you get a better handle of what you can afford, but you can plan to use your savings for bigger goals like buying a new car or paying off some of your student loans.
3. Prioritize Paying Off Debt
Consider setting deadlines and dedicating a percentage of your paycheck to help pay off your debt. This may help you work these payments into your budget and adjust your spending accordingly, says Forbes.
4. Avoid Impulse Buying
Whether it’s online shopping or going to your favorite store, impulsive shopping can happen anywhere — and before you know it, you have blown your budget on unnecessary items. So the next time you’re shopping, consider making a list of everything you need. And once you start shopping, try to have the will power to avoid purchasing anything not on your list, even if it’s a good deal or heavily discounted. You may also want to look for coupons and discounts for the items you need before you begin shopping.
Taking a few steps now while you’re still in your 20s may help you be better prepared for your financial future.
Originally published March 15, 2011.
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