There is no doubt, you are going to need a lot of money for retirement. There is no guarantee that there will be Social SEcurity for everyone in the next 10 years, let alone the next 20, 30 or 40. So you want to take advantage of any retirement plans that you can, such as the Roth IRA. And you want to be able to save enough money each month to stay afloat.
Saving money is a learned habit, rather than an inherited trait. Many people think that others are just born savers, more conservative with their resources by nature. But you can learn how to save if you just put in the effort to build good habits.
Start out with an emergency fund. That will be what can keep you afloat during the tough times, like a medical emergency, car accident or major house repair. Or even job loss. A good rule of thumb is to have three months of expenses back up in your emergency savings account in order to stay solvent in the event that you lose your job.
Make a budget. You are not going to max out your Roth IRA contributions or create an emergency fund if you are not tracking your expenses in an organized way. You need to figure out what income you have coming in each month and how much expenses you have. That is the way that you need to stay on top of you money each month. Paying attention is a great way to stay ahead of the game.
Set up automatic savings. There is no need to put that on your list of things to do each month. Use your bank account and set up automatic payments to your savings account, retirement accounts and other accounts meant for purchasing large items. That means you don’t have to think about it and the savings will be there when you need it.
Get a Roth IRA as soon as you start to make money. Saving for retirement as early as possible is great way to take advantage of compound interest. If you start saving for a Roth IRA at 25 instead of 35, the difference in your account when you get to retirement age might be a few hundred thousand dollars.
Save your tax refunds and unexpected sums of money. If you have a major gambling win in Atlantic City or your get an inheritance from a distant relative, put that money away, instead of spending on a new car or an upgrade to your home.
Take your time when you are thinking about making a big purchase. Do you really need that brand new car? Could you survive with an older car that might cost half as much? How important is that state of the art kitchen upgrade? Can you make do for a few more years?
Take advantage of your library. The movies that you can get for free can provide hours of entertainment. And you don’t need to buy books on Amazon anymore. You can just get a library card and get as many books as you want on as many topics as you want. The savings in books might be a significant amount.