Robert Powell, contributor to USA Today, recognizes how hard it is for working millennials or gen. Xers to save for tomorrow while living for today.
Powell offers some great tips on how to best manage your assets and liabilities while saving for your retirement.
Begin with a balance sheet: discover your net worth after subtracting your liabilities from your assets. It’s good to list out all of your inventory: what you owe and what you own.
Create a budget: Lawson recommends using a three-bucket approach to spending 1)past/committed expenses 2)savings and 3)current expenses. This helps align your priorities each month.
Pay down debt, form of saving: “If debts are high, you have to generate more cash flow, which requires more assets. If you minimize your spending commitments, you need less to make it work. For those tight on cash flow, reducing debt ought to be the priority.” says Joe Pitzl, managing partner of Pitzl Financial in Minnesota.
Look for ways to reduce costs: Continue to live at home with parents or roommate, opt for public transportation, etc.
Strike a balance: between living for today vs. saving for tomorrow.
Save enough to get the full company match: contribute as much as you can to your employer-sponsored retirement plan if your company matches – double bang for your buck, it’s free money!
Invent in a Roth IRA or Roth 401(k): another alternative if your employer does not offer a retirement plan.
Other tips Powell suggest for millennials to save include:
- Think about the power of compounding
- Save 50% of every salary increase
- Allocate your investments based on your fact pattern
- Use different accounts based on your career
- Toe dip into investing
- Keep it simple
- Seek professional help
Learn more about how you can tackle each of this tips one at a time.
You may view the full article, here.
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