5 Ways to Plan For Retirement And Your Wedding
We know saving and planning for retirement is not the most fun conversation. They also appear to be two things you cannot do at the same time, save for a nest egg and retirement. If you are just starting out in your career, you may just be trying to save up for a new rug in your living room! Save for retirement and start a nest egg?!
It may be true, you don’t have a lot of income at the present time, but you have an abundant resource that even the wolves of wall street envy. Time.
If you want to plan for retirement and save for a wedding, vacation, or Masters degree, you are going to have to begin being strategic with your money. Here are a few ways to do so.
1. Emergency Fund
Accidents happen, unexpected expenses come up, and sometimes you go a bit over budget. What’s the plan? If you said charge it to your credit card and pay the minimum, let’s rewire that thinking. Instead of accumulating interest, let’s create an emergency fund for when things get tough. Nothing fancy, but let’s save 3 months of expenses.
You may already have this in the bank. If so, set it aside. If not, begin putting a little bit of your paycheck away each month to hit that goal. It doesn’t need to be much, $50 is a fine place to start. The important thing is to start somewhere.
2. Nest Egg
Once you have your emergency fund established, begin building a nest egg. This is where you will save up for that downpayment on a house or wedding of your dreams. Again, it doesn’t need to be much. Set a goal for yourself and make it a bit of a challenge. A challenge amount that forces you to eat at home 1 or 2 times more per month or maybe you give up cable.
Then stay consistent. As soon as that income is deposited, put that challenge amount into your nest egg account.
3. Open A Retirement Account
Ok, so you have an emergency fund and started putting a bit of income into your nest egg. Let’s challenge you a bit further with opening a retirement account. There are 4 main types of retirement accounts. A 401(k), IRA, Roth 401(k), and Roth IRA. Each one has different benefits, tax requirements, and contribution limits.
Do a bit of research into each one and consider that challenging amount. Can you grow it? Maybe you need to divide it between your nest egg and retirement account. Either way, it is possible to do both. You do not need to set your entire retirement savings away right now. Let it build.
4. Compound Interest
As we mentioned earlier, you have something everyone envies, time. Time can be the biggest driver of revenue and can build your entire retirement account. Consider the fantastic example below from one of our favorite Instagram accounts, @PersonalFinanceClub.
Pretty cool, huh? You don’t need to be the next Mark Zuckerberg to have a comfortable retirement. In the example above, she is investing $200 per week or $800 per month. This is just her side hustle income too!
It is a hypothetical example, but a great one of showing how just a little bit of investing can grow tremendously.
5. Review Your Expenses
Lastly, if this all still feels unattainable then let’s review your finances. Take a look at your finances over the past year then divide the expenses into categories like groceries, entertainment, utilities, rent, etc. Where do you spend the most money? Are you surprised by any of the results? Maybe you are still a bit confused on where you should cut back. Here are some of our recommendations:
- Cut back on groceries. Ordering pickup can decrease those impulse buys and maybe help you eat a bit healthier.
- Buy cheaper brands. Whether this is toilet paper, pasta, or shoes, a brand label has a cost.
- Review subscriptions and memberships. Did you forget about that Disney+ subscription?
- Watch utilities. Does it cost less to run the AC at night? Do you need to water your lawn twice a day?
- Compare insurance rates. Shop around, tell competitors what you are currently paying and see if they can beat it.
- Eat out less. You don’t need to never go out with your friends or order pizza, but remember that savings goal you had? One or two nights in just may help you achieve it.
It may not be the most fun topic – cutting back spending and reinvesting, but when you are on that dream honeymoon it will all be worth it. You will only thank yourself when you can retire comfortably and be that grandma that passes $20’s to her grandkids when mom and dad aren’t looking. Let’s get strategic and take advantage of this time in your life.