As I near my 40’s, it seems quite late to finally start to personally save for retirement. I would say that not starting early and saving up to this point is one of my regrets. I’ve gone through all of the seasons of my life, up to now, with blinders on – in regards to investing, retirement, and savings. Ask 10 people the value of a penny; I would imagine most people’s attitude towards a penny is one of disregard and lack of respect – a nuisance in our currency.
I think it’s pretty safe to say that my generation should not depend on Social Security being around when it comes time for us to retire, which gets later and later. It was never meant to be what it has become today though either – a supplement to older age income, or in some cases, the only income some seniors have nowadays.
So, as I am preparing to invest in my company’s retirement plan, it’s brought up some lessons I know are vital to teach our children – save, save, save…invest, invest, invest…..wisely, that is.
When you’re in your early 20’s, the last thing you’re thinking about is when you’re retired and what your net worth will be. Am I right?
Saving, much less budgeting or money management was not something I was ever educated about. I heard over and over how “money doesn’t grow on trees” and comments about there never being enough. I was raised in a home where the focus was on lack. I can only wish now that money management was part of school curriculum. If children are not getting that education at home, I think it’s vital they receive it somewhere.
Anyway, any dollar I earned was a dollar that went out. I didn’t save, ever. I worked to pay bills and lived for the weekends. I finally got educated when I got my first credit card in order to establish credit. I had flooded out of my apartment, I had failed to inform the credit card company and by the time I got that credit card bill (with a lot of added late fees), my bill was nearly $1,000. Needless to say, it took me a while to pay it off and I learned a pretty valuable lesson…..treat a credit card like cash. I have not had the same problem since.
What I have accomplished since that time was greatly increase my credit score. The day I found out mine was higher than my husband’s was a pretty proud moment! lol! So, I guess you could say I fell into the camp of “strategic credit score raiser but poor saver). To this day, I have several credit cards – each serving their own purpose (i.e. store savings or cash back rewards that even paid our Christmas gifts one year). I realize now though that those things I’ve purchased over time won’t get me to enjoying my later years in life – which is what I truly desire.My “why” for saving has finally come to light; however, I do wish I would have had this revelation many years ago. That doggone hindsight….it’s a bugger.
The lesson here is this: despite whatever “season” you are in in your life – it’s never too late to start saving. The question is then, where to begin? Last year I started reading the book, “Money: Master the Game” by Tony Robbins. I got into the middle and never did finish; not for lack of interest, it’s just a topic that’s hard to focus on for a long period of time (given how thick this book is and the wealth of information therein). Along with this book as a guide, I hope to make the best retirement choices for myself and my family, by taking advantage of my employer-matched retirement plan.
The one thing I remember from reading Tony’s book thus far is that compound interest is the clearest path to growing a nest-egg. The other is paying yourself first, always. I started doing this when I had my photography business. Now, paying myself means putting an allocated amount into savings monthly. You don’t need to start with a lot, even if it’s $50 out of every check….it adds up. Anyone can give up eating out a few times a month or expensive coffee drinks. But, that’s the thing – you’re not giving anything up, rather, your simply paying yourself – it’s a positive thing to see your savings build.
Beginning is the hardest but once you do, you’ll discover just the momentum you need to keep going. There’s a sense of pride and empowerment you feel once you feel as though you are no longer a slave to your paycheck but rather a manager of your financial future.
I know this post doesn’t share any concrete investment advice, because I too am still learning. The advice I would give anyone in the interim is pay yourself first and put that money into an account you don’t touch. Better yet, have X dollars directly deposited from your check so you never see it. Also, treat every credit card like cash; don’t charge what you can’t pay in full in one billing cycle (I do believe this is the ONE thing I did that brought up my credit score tremendously). If your employer offers an employee-matched retirement fund, by all means start at the max and increase 1% each year if you can. Your company is giving you money – take it!! Likewise, if you receive a raise, have the difference automatically deposited into a special savings (i.e. that trip you’ve always wanted to take or camp fees for your kiddos – kids away at camp is kinda a vacation so yay for that idea) – you won’t miss it and you’ll thank me later. Finally, write down what your retirement goals are and have that conversation with your significant other/spouse.
You just gotta begin….somewhere. And like I tell my kids all the time: money is to be respected, even a penny…because a penny is money, too. It all adds up!