How To Save Efficiently For Retirement
There is no one-size-fits-all way of saving for your retirement; we all have different aims, techniques, and resources. But whatever strategy you choose, it’s really important to make sure you put something aside for your retirement. The earlier you start, the bigger the pot you can build up, and the better off you will be when retirement comes around.
Give a little now, get a lot later
You really don’t have to give up that much to build up a respectable retirement fund. Just a couple of hundred dollars each month can make a significant difference, particularly if you start early.
The first thing to do is to review your budget and find out whether you’re spending too much unnecessarily. If you don’t keep track of your expenses, it’s difficult to see where your spending isn’t really necessary. Five dollars for a lunchtime sandwich, a three dollar coffee in the morning and another in the afternoon, that’s nothing… In fact, that’s more than $50 you don’t really need to spend in your working week, or more than $2000 a year.
There is no excuse for not tracking your expenses these days – there are phone apps that can take care of the whole process. When you’ve got a better idea of your outgoings every month, set yourself limits for each area of spending, e.g., eating out, movies, etc. You’ll soon find it quite easy to save and that can all go in your retirement pot.
You don’t have to slash and burn your budget to make savings
Many people find it easier and more relaxing to actually stick to a budget with a few minor cuts. If you try to go cold turkey on everything you like, most likely a month down the road you will be so fed up you’ll go straight back to how you were before. Just cut down on a few things, and try and do it in a way where it won’t even seem like a sacrifice. If you have to have your morning coffee on the way to work, buy an insulated cup and take your own. If you’re spending too much eating out with friends, ask them to dinner at yours (they might appreciate the saving too, and invite you to their place – more savings!).
Implementing these little adjustments to your budget, you’ll be surprised how quickly the savings add up into hundreds of dollars a month; think about that over a long period and it can become a staggering amount. $200 a month in a 7% interest retirement fund will be worth almost $100,000 20 years down the line.
Of course, saving for retirement requires some sacrifice, but if you don’t make sacrifices now, you’ll really wish you had later. But you don’t have to live like a pauper to build up a respectable pension pot; if you make sensible and sustainable financial decisions and reduce outgoings where you can, you can still enjoy life now while creating a healthy pot that will help you enjoy life in retirement.