Three Tips To Help You Start Saving For Retirement In Your 20S
The longer your money is in the market, the more you'll earn. This is why saving for your retirement in your 20s is so important. Even if you only manage to set aside a few thousand dollars, thanks to compounding interest, that money will grow into so much more than the money you save in your 30s or 40s. Saving for retirement in your 20s may seem like a stretch when you're just getting your career going and settling into post-college life. Use these tips to help you set aside the cash for this life-changing endeavor.
Drive an older car.
When you graduate from college and land your first job, you might get the urge to ditch the clunker you've been driving for the last few years and finally buy yourself something nice. But since cars go down in value so quickly, springing for a new car is a waste of money that you could be saving for retirement. Grit your teeth, and resign yourself to driving an older car for a few more years. Especially if you already have that older car. This will save you from having to make a car payment each month. Put the money you would have designated for a car payment -- at least $200 or $300 per month -- into your retirement savings.
Get a roommate.
Whether you own a place or you're still renting, taking on a roommate is a great way to bring in a few hundred extra dollars per month (and maybe even more in some cities). If you're hesitant to share your space with someone else, consider renting out a room for just a few months at a time. For instance, you could advertise that you have a single bedroom available for just three months. This way, even if you don't particularly like your roommate, you have the consolation of knowing they'll be gone in three months. And when they do leave, you'll have some money in your pocket to invest in your retirement account.
Learn to cook quick meals.
If you're like many people in their 20s, you eat a lot of meals out at restaurants because you're busy and think you don't have the time to cook at home. But eating out gets expensive and quickly eats up money you could be saving for retirement. Teach yourself how to cook a few fast meals -- like fried rice, chicken stir fry, and gourmet grilled cheese. Then, take to the kitchen and see how long you can go without dining out. Every time you're tempted to eat out, put the money you would have spent into a jar or a separate bank account and prepare yourself a meal at home instead. You'll be surprised how fast you accumulate money to add to your retirement account. To find out more, speak with someone like Wealth Mechanix.