Reports suggest that 46% Americans and 61% Indians do not understand how to or when to start saving for retirement. People actually are not able to prioritize their savings because they have plenty of financial obligations. So, what is the best way to save money for retirement when financial obligations are high? Start saving on a daily basis if you are not able to make long-term investments.
Remember, every bit of money you save can pile up to become a lump sum. Do not wait for a day when you will have a lot of disposable income. Because as your income increases so will your expenses. So start saving from the day you start earning.
Sounds funny? It is, but that is the best way to save money for retirement. It is a humble beginning and you will realize that you have saved a lot after a few years. If you hadn’t saved that little money, it wouldn’t have turned into such a big amount.
Now, how much to save?
Try Saving 10% of Your Salary if you have just started a job:
This isn’t going to be a big number for you. So, there shouldn’t be excuses not to save 10%. If you can manage to save more, that is even better. This is the amount most experts recommend and it is a good starting point.
Plan your Expenses:
Love to eat out? Who doesn’t?
But have you ever calculated how much you spend on eating out or restaurant bills weekly. If you haven’t and you are one of those who love to eat out, make a calculation right away. You might be spending a chunk of your income, without even realizing.
Imagine saving 50% of that amount for your retirement? It is not going to be difficult.
Plan out one meal out every week. It will be good for your health and will help you save money for your retirement as well.
Set up Recurring Deposits:
Recurring deposits are easy, convenient and simple way to pool money without feeling a pinch in your pocket. Depending on your income, you can create a recurring deposit for a long period of time.
You can seek help of an expert who can guide you on your investment options based on your current salary and how much you wish to invest.
The rule is to SAVE under all circumstances and not defer it.
How Can you save for retirement in your 20’s in India?
As a golden rule, experts suggest, SAVE first and SPEND Later.
Let’s see one example that can be your life scenario as well. Suppose X is earning Rs 25,000 in India every month. Bills and other commitments add up to Rs, 15000 which are unavoidable.
Most youngsters tend to spend the remaining amount – i.e. Rs 10,000 in this situation without thinking much. People tend to defer their savings till the next month.
If you have Rs.10000 in hand to spend, put away your savings first. So, whatever amount you wish to save, should be put away first and then the rest spent. This way you will be able to control your expenses and make wise savings.
Here are some steps that can be followed:
- First prepare your financial goals ( how much you wish to save in one year)
- Plan where you wish to invest ( yearly contributions or monthly contributions.)
- Learn personal finances and saving methods.
- You can invest in equities
- Make the most of provident fund account.
- Create a recurring deposit
Are there any Low Risk Investment Options for those in their 20’s in 2023?
High Yield Accounts – These accounts are completely safe because you are not going to lose your money. A certain amount of money is insured so that your money is never lost.
Bank Deposits – You can invest in short term deposits in banks. Once the amount matures you can again reinvest it. This is one of the best ways to grow your money in a risk-free way.
Corporate Bonds – There are many companies that issue bonds that are low risk. You can seek financial advice about these bonds and make an investment.
Must Read: How to benefit from same day pay loans
Frequently Asked Questions:
Should I start investing when I am 20?
Yes, if you have an income, you should start investing. It will give you a good start and make it a habit.
How Much Should I Save for my retirement in my 20’s?
It is quite a personal question and tends to differ from person to person. However, as a general rule it is good to save an amount between 10% to 15%. If this seems to be a big amount depending on your financial condition, you can save even 2%. But make it a rule to save without any excuse.
Is 25 too late to start investing?
It is never too late to start investing. You can always invest when you want.
Investing in your20’s for your retirement will give decades to your money to grow and mature. It is one of the best ways to save money.
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