To prepare for emergencies, big life changes, or other unexpected events like say, a global pandemic, how much should you put away annually? The truth is – it’s a lot less than people think. Over the course of a career, saving about $180 every biweekly paycheck has the power to make you a millionaire.
One dollar can go a long way. Especially when you’ve been saving for decades. When you start saving early, you are better prepared for anything that comes your way.
Here’s how to start saving early:
Get Your Degree
There’s substantial evidence that college graduates out-earn those without their degrees. Employers look for the quality experience and dedication that is earned through that college education. For this reason, it is shown that earning potential increases by nearly half a million dollars when you have a degree.
Pay Off Any Debt
It is critical that any debt is paid off as quickly as possible. To remain focused on this goal, make sure to live within your means. This simply means to budget carefully, factoring in monthly contributions to your debt payments, and avoiding overspending. Not only is paying off debt a huge stress relief, but it also makes it easier to start saving sooner.
Make your savings account your favorite account. By prioritizing your savings, you keep an eye on the prize – security when things go wrong and peace of mind that everything will be okay. With careful planning, it is possible to save and invest about 15% of your annual income.
In order to maintain this percentage of investment, monitor your monthly income and expenses hand-in-hand. If this level is not attainable, consider making adjustments to your income or expenses.
Additionally, when it comes time for that special bonus or a pay increase, consider saving it instead of splurging. Eventually, the saving will become a healthy habit rather than a chore.
Take Advantage of Compounding Interest
Investing may be uncomfortable at first, especially if you’ve never purchased stocks or bonds in the past. However, it is one of the best ways to yield positive results in the future.
Perhaps the best place to start is your employer’s benefits. Are you taking full advantage of the investment opportunities within the company? Does your employer match your contribution? If so, don’t pass up the opportunity to claim free money.
There’s no quick fix to getting rich. When it comes to planning for unexpected events, slow and steady surely wins the race. We recommend saving and investing as early as possible to ensure you stay ahead of anything life throws your way..
The saving starts now. Schedule a 15-minute call with us, so we can help you prioritize your finances, prepare for tax season, and ultimately, save more.