"I need to save money for retirement." That statement alone just caused 4/5 women's heart rate to spike 20+ beats per minute. Maybe a cold sweat just came on, or perhaps you're starting to feel a little short of breath. First off, if you are one of those girls, I need you to stop, close your eyes, and take a breath and pretend you're on a beach in Bermuda or a cabin in the woods or a lake house in Maine, because one of these could be your retirement dream home.
The way I see it, there two buckets. One bucket of "I'm buried in a mountain of student loans" and another bucket of "I just don't know how to start" mindsets. My goal is to turn over those two buckets and give you five simple steps on how to become financially healthy and independent, no matter what age you are! So, grab a notepad and a pen and take note of 5 simple steps to move you toward your retirement dreamscape.
One: Set Your Money Goals
Part of the problem that leads to anxiety, shortness of breath, and a cold sweat when it comes to saving money is that you have not sat down and thought about your future retirement. Before you say, "I'm not old enough for that," stop. You are never too old to think about your retirement, whether your 20, 30, 40, or 50 years old. Two, it will be here before you know it!
Planning for your retirement should be fun. Write out your dream place to retire in a journal or a napkin. Where are you living? What are you doing? There is no right answer; it's whatever your heart desires. Please put it in a place where you can see your closet door or bathroom mirror every day. If you write it out and look at it every day, it will become less a dream and more of a reality.
Two: Make a Budget
I know this seems daunting at first. I know you are wondering where even to start. The first thing you need to do is calculate how much money is coming in, how much is going out, and know where the money is going. The goal is to track your spending for about 30 days to get an idea where you are putting that hard-earned dinero.
A budget will hold you accountable and keep you honest. An app like Mint is beneficial. It offers you a helpful breakdown of your spending habits, gives you alerts when you go over your budget, and is extremely customizable for your goals.
Dave Ramsey, a prominent figure in the world of money management, encourages you to budget 50% towards your "needs," 30% towards your savings, and 20% towards your debts. Start here, and you will be on the road to success!
Three: Create an Emergency Fund
Personal Finance coach, Erik Carter, suggests setting aside enough cash to cover you for 3-6 months. It is best to make this an automatic contribution to the savings account, so you never miss it. It's essential to prepare for whatever life throws your way.
https://www.forbes.com/sites/financialfinesse/2020/12/30/20-financial-resolutions-for-2020/#39c3447e5882
Four: Pay off your debt
Debt is like a black cloud hanging over your head. It's frustrating and causes you a lot of unhealthy anxiety. Dave Ramsey suggests utilizing the snowball effect. It's straightforward. List your debts from smallest to largest. Plan to pay the minimum on all the debts except the lowest- the goal is to strike out that loan as quickly as possible. Once you pay off that debt, you move to the next one. Take the amount you were paying on the first debt and add it to the next one. You continue that process until all your debts are paid off. The snowball effects! Check out Dave Ramsey's website for additional help!
daveramsey.com/blog/get-out-of-debt-with-the-debt-snowball-plan
Five: Save for Retirement
Finally, it's time to save for retirement! Set a goal and write it out. Dream big and shoot for the stars. Your retirement can be whatever you want it to be; your imagination is limitless. The goal is to start investing at least 15% of your income to a 401K and Roth IRA. Set your transfers to automatic, so you never have to think about it. If you are unsure how to do that, check out these articles to help get you started. I know it seems scary and a far reach, but nothing is impossible.
https://www.forbes.com/sites/financialfinesse/2020/12/30/20-financial-resolutions-for-2020/#39c3447e5882
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Today is the day you become financially independent. The biggest mistake you can make is WAITING. Choose to start now, no matter where you are in life. Start with these five simple steps, and you will create your financial independence and the retirement of your dreams.
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