For most Americans, the idea of retirement involves a series of images of them enjoying their golden years with no worries about bills to pay and work hassles. In other words, retirement is all about enjoying the last decades of your life in leisure and ease. The sad reality is that, thanks to the recent financial crash, many Americans nearing retirement have found themselves making do with less or canceling their retirements altogether.
This is the sad reality many people have to contend with. The sad truth is that they didn’t have to do this. If they only saved enough for retirement, they would still have enough cash squared away for their golden years. If you want to join this small group of people, follow these easy tips on how to save money for retirement.
Enroll in forced savings schemes
People like to spend money they think they have. If you think you have money, you will find ways to spend it. That’s human nature. You can short-circuit this by enrolling in a forced savings scheme at work or, if you own your own business, a forced savings system at your bank. Regardless, you are forced into a situation where you don’t see all the money you’re making. You are left with a smaller amount. You divide this among your expenses and liabilities. You have less money left over, but you end up with a bigger nest egg.
Set a tight monthly budget and stick to it
Discipline is such an unpleasant word nowadays. Still, you need discipline if you want to make sure that you retire into a life of ease and leisure. If you lay out all your expenses, you will quickly discover that you don’t need all the stuff you are spending money on. You can afford to dial back some of your expenses. You just need to focus on stuff you absolutely need and a little extra. The rest, you can save for later.
Pay yourself first
If you have an investment plan or savings plan in mind, make sure you pay yourself first. You would be surprised how much you can dial back expenses if you force yourself to live with a smaller amount of money at the end of every month. The key is to give yourself the fund you need to grow an asset base and the rest can go to pay off expenses and liabilities – stuff that don’t yield any money or grow into assets.
Invest in assets
There are two things you can spend on: stuff that puts cash back in your pocket and stuff that takes cash out of your pocket. The great thing about spending on assets is that they generate money which you can then use to buy even more assets. Eventually, you build a system where your money is growing on its own instead of you having to break your back for every red cent you make. Build assets. Start now.
Reinvest income into assets
While you can build quite an asset base setting money aside from your monthly income, you can speed up your asset base creation by reinvesting the earnings of assets into buying more assets. This is like compound interest-the money you set aside for assets produces even more money which you can set aside for even more assets.