Accurate Figures Do Not Lie: The Case for Saving

  • SumoMe

Figures often have more impact than the written word. Colors make an impact as well and when it comes to red and black in finance, red is associated with debt, black with a surplus. When you are planning a stable financial future right through retirement you will not be happy to see red too often when examining your monthly accounts; it will represent spending more than you are earning each month.

retirement

Everyone has a huge number of decisions to make in life. When it comes to things financial they begin almost at the first stage of independence, perhaps at the point of going to college and having to manage their own finances? A student loan, parents and perhaps a credit card are three things that will get you through the years of study before you begin your career. The first pay check is good news but you are likely to be setting out with debt to settle. If it is largely your student loan that has been positive borrowing to help your career prospects. If you have significant credit card debt then you will be facing a high level of interest applied to the balance at the end of every month.

While retirement may be the last thing you are thinking about in your twenties you should at least look at some of those figures that are so powerful in conveying a message. The difference in the size of your retirement fund between starting to save at 25 and delaying to 35 is quite illuminating.

Loans

Just Right Online lenders who are shown your monthly income from regular employment are likely to approve a personal loan to pay off credit card debt; the interest rate applied is far lower than the credit card company charges. That would be one problem removed but it is important to look far beyond the purely short term.

While retirement may be the last thing you are thinking about in your twenties you should at least look at some of those figures that are so powerful in conveying a message. The difference in the size of your retirement fund between starting to save at 25 and delaying to 35 is quite illuminating.

Delay?

Imagine you decide to even waiting until you are 45 before turning your attention to retirement. You are not giving yourself enough time to catch up. If you save $5,000 a year until you are 65 at 8% you will have nearly $300,000. However if you had put away just $1,000 a year at the same rate 20 years earlier that would have ‘earned’ you $50,000 by the time you reached 45; the same $5,000 a year would have accumulated a considerable sum that your delaying has denied you. Just think how little $1,000 a year is in weekly terms! One visit to an inexpensive restaurant?

There is no doubt that it is a matter of balancing competing demands for your money. In your early years the student loan and general living expenses are realities. As the years go by there may be the real estate deposit and a growing family. No one is suggesting the exercise is easy but surely a small provision as early as possible towards the days when your career is over and you deserve a comfortable retirement makes sense?

Budget Discipline

The answer is that you should begin to plan as soon as possible and have the discipline to follow the budget you prepare. Eradicating expensive debt, perhaps as illustrated above with a competitive personal loan, is only a starting point. You will struggle to save for anything, emergency fund, real estate deposit or retirement, if you are saddled with expensive credit card debt. Credit cards are convenient and indeed essential for some forms of purchase; hire cars, general travel and online bookings are good examples. They should be used purely for convenience and bills settled in full before the penal interest is added.

There is nothing wrong in getting advice. Some people struggle with figures while they are second nature to those who work with them every day. Ultimately you will have to make the final decisions and bear the consequences; that’s life. Every case is unique. You may feel that immediate financial needs are more important that retirement which is so far away. You can decide and act upon that but you should bear in mind the figures above that show the amounts you can never make up by starting retirement provision until middle age unless you are able to put so much more away each month.

 

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