If you’re thinking of investing money for a rosy retirement, pat yourself on the back. You’re taking great steps toward a golden future. But before you start investing, here are some important steps to follow.
Learn How to Budget
A budget shouldn’t equal deprivation, but rather be a spending plan to help you see where you are and what your goals are. Without a financial roadmap, you’ll never save enough money to set aside for emergencies, let alone for investing. Buy a pocket notebook and for one month, write down every item you buy. At the end of that month, look at your expenses and divide them into those things you need as opposed to items you simply want. Decide which ones you can eliminate in order to save each month.
Sign Up for a Retirement Account
This is one of the easiest ways to start saving money for your retirement, especially if your company has a 401K plan. Peter Comisar advises you to have money deducted from your paycheck each month so you aren’t tempted to spend it. That money builds over time and is a big step toward a comfortable retirement.
Get Debt Free
Until you pay off your debts, you’ll have a hard time saving toward a comfortable retirement. Make a goal of becoming debt-free in increments. Pay off your smallest credit card bill first and cut up that card so you aren’t tempted to use it again. Use the money you used to pay on that smaller debt and apply it to the next bigger debt until it’s paid off.
Continue in this way until you have eliminated all your smaller debts. After that, tackle the mortgage. Make extra payments toward the equity of your home. Being able to live mortgage-free is a big step in the right direction of financial freedom.
Build Your Emergency Fund
Get into the habit of putting money in your savings account each month. A good rule of thumb is to put ten percent of your net income in savings each time you get a paycheck. Build up enough savings that you could live on for a couple of months as an emergency fund. It’s money you don’t touch unless it’s a true emergency, such as losing a job or suffering an injury that keeps you from working.
Follow these tips and you’ll soon have a sizable amount you can invest for a bright future.