Americans spend more time planning for their vacations than their future.
According to an online survey from MyBankTracker.com, out of 1,000 Americans surveyed, one in five spends more time planning their vacation than managing their finances. This indicates that folks are more focused on immediate pleasure instead of thinking long term and about the bigger picture: Retirement.
Whether you want to obtain the professional guidance of a Financial Advisor, or simply want to start saving little by little, the best time to start is now! Many adults age 25 to 34 are missing out on the opportunity to set aside money for their future. Starting with a simple budget of $100 a month for retirement is the easiest way to get a jump on financial readiness. According to merrilledge.com, “If your employer offers a traditional 401(k) plan and you are eligible, it allows you to contribute pre-tax money, which can be a significant advantage. Say you're in the 12% tax bracket and plan to contribute $100 per pay period. Since that money comes out of your paycheck before federal income taxes are assessed, your take-home pay will drop by only $88 (plus the amount of applicable state and local income tax and Social Security and Medicare tax).”
Many people find it difficult to decide the exact amount they should be saving. The ideal percentage to save from each check is 20%. Out of that 20%, 10-15% should solely be for retirement purposes. The leftover percentage can be designated for an emergency fund. Which plays hand-in-hand to avoid having to take money out of one’s retirement fund.
Getting your finances in order doesn’t have to be difficult. A few ways one can do so, is by simply starting a budget. Look at your current spending habits and calculate all of your monthly bills, payments, and necessities on a list. Specify the exact amounts. If possible, for costs that will not change, set up automatic payments to come out of your account. Most banks with online checking and savings apps, will send out balance notifications for every transaction, charge, and withdrawal on the account-to your phone.
However, with changing payments for electric/heating and credit-card bills, consider setting a reminder on your phone so you’ll be able to make sure those are taken care of on a timely basis. The $100 a month for retirement- can and should be used for building your savings account. Which in turn can also be set up automatically and will go a long way in building substantial savings over time. In being mindful of your spending habits outside of recurring payments, you’ll start to notice exactly how much you’re spending on non-essential items, like dining-out, coffee runs, and clothing. In order to potentially cut down on excessive shopping , set a monthly limit for yourself and do your best not to exceed that amount. Soon, you’ll be able to start putting even MORE money into your retirement/savings/emergency funds!
Never forget, while saving for your future is extremely important, so is taking a break and taking a vacation if your finances are well taken care of. Vacations funds are also an option!