The uncomfortable truth about securing a solid financial retirement, even when you run your own business, is that the best time to start saving is when you earn your first dollar – just at the time when spending is a novel, fun, glorious thing to do.
When your are young, you buy your first car, your first home. You don’t want to think about those years playing golf and puttering about the house or taking off to see the grand kids. But this is clearly the time to realize that every dollar you earn also should include a portion that goes to your retirement.
Eventually, that will be clearer to you. When you’re 20, you aren’t likely to think that a fraction of every paycheck should be put aside for when you want to retire. But forgetting to get started until you are in your 30s or 40s, puts you at an obvious disadvantage.
In the first place, you could be using those early years to invest and learning how to invest wisely and safely. Secondly, investment are expected to grow over time, so the dollars you put aside in your 20s will actually be the most fruitful of any of the dollars you invest, because they will have more time to grow.
On a sliding scale, you might put away 5 percent of your earnings in your 20s and raise that each decade until you are putting 25 percent away in your 60s, when various bills, like home loans and tuition costs have been paid out. But, with interest compounded over time, those skimpy dollars you tucked away when you are young could be earning more than the hefty contributions you make when you are older.
The first step for a secure retirement may well be to turn to a financial management company with a diversified service set to actualize substantial gains down the road. Simple cash management strategies espoused by professional consultants that stand up to domestic legal protocols can be tricky for a novice to grasp the first time around. There are also collection modeling strategies described by firms like Cane Bay Partners and others that can trim losses and maximize the revenue potential.
One quick concept to grasp is that savings is the same, in the world of finance, as investment, unless you save by putting cash under a mattress or in a box buried in the back yard.
There have been several stories over the years of blue-collar workers with very humble salaries giving $250,000 or more to a charity when they die. These are folks given great accolades for their skills at saving money. But they also come with some “tsk-tsk” type reactions from savvy financial consultants who know that that admirable sum could have grown exponentially had the saver also been a wise investor.
Suffice it to say, as well, that serious investment requires serious strategies. A business that grows beyond Mom and Pop size should immediately be categorized as an investment, not just a job. Firms that can turn profits into a long term management strategies, whether oriented domestically or with an international presence like the aforementioned Cane Bay Partners, can reshape your future by maximizing early gains to turn them into long-term payoffs.
While you let the big boys at least guide your financial strategies, there are still some day to day practices that can help you to maximize your efforts. A few helpful hints include
Adequate insurance.
Even folks who have gone through devastating events in their lives – homes lost by fire or major illnesses – can retire well if they have been insured at the right time.
Earn early
Seems simple, but if you start at a salary of $20,000 per year, you have a long way to go. If you start at a salary of $30,000 or $40,000, you have much less territory to climb to maximize savings potential.
In your 20s
As a simple guideline, in your 20s, you should earn 20,000; in your thirties $30,000 and in your 40s $40,000 and so on. But this old guideline probably needs revision. Start at $30,000 in your 20s and go up from there.
Stick to a plan
It can’t be stressed enough that planning makes all the difference in the world. Studies frequently bear this out. Those without a plan, flounder. They guess. They have setbacks. Folks with a plan have fewer setbacks and reach financial targets more often.
Invest in yourself
Remember the adage, that you have to put money in to get money out. That adages is usually applied to businesses. But it also applies to individuals. Invest in your education through schooling or seminars or even going to the library. Invest in your health. It will pay off over time.
Save now, invest later
Start by saving in a retirement account that includes penalties for early withdrawal. Once what you save becomes solid you can start assigning more and more of your savings to investments. Do so through a broker, always. It’s worth the commission to pay others to handle your money simply because they won’t get over exited by a bad deal, which might occur to you.
Live within your means
If there’s nothing so great as earning money by simply watching an investment do well, there is nothing more frustrating than paying money to use money. In this, there’s a big difference between borrowing for a car, a home or for tuition at reasonable rates and paying 19 percent to spend $50 to buy something you don’t need.
Look at it this way: A house, a car or tuition is an investment. You should borrow for investments, not for frills and thrills.
