2016 is almost over. Soon it will be a new year, and with it will come New Year’s resolutions. Have you thought about what’s going on your list this year? Will you lose weight? Quit smoking? Both worthy goals, but there’s another that’s just as important if you want to secure your future. What are you resolving to do to save for your retirement? The longer you put that off, the smaller your nest egg will be when the day finally arrives.
How can you do it, though? It’s a struggle to make ends meet as it is. Can you really afford to save money for retirement? The truth is you can’t afford not to. Not only that, it’s easier than you think. Here are a few simple resolutions you can make—and stick to—in order to help you plan for your future.
- Figure Out Your Net Worth Before you start saving money, it’s important to know just how far you need it to go. What are your assets, including property and investments? What are your liabilities, such as mortgage payments and credit card debt? How long will it take you to pay those off? By calculating your net worth you can get a good idea of your starting point as you start saving.
- Review Your Credit Report This goes hand in hand with determining your net worth. Find out your credit score and continue to keep up with it over time (you’re entitled to three free credit reports per year from the three major credit reporting agencies). This way you know exactly where you stand and can take steps to improve your score and get into a better position financially.
At the same time, if it turns out your credit is great, you can consider asking for better rates from your bank for credit cards, even your mortgage. The savings can then go straight into retirement funds.
- Designate Funds Clearly Whenever you have money, the temptation is to spend it. Not necessarily in a greedy way, either. If an appliance is on its last legs or there’s some important work that needs to be done on your house, that’s probably going to be the first thing you think of when you get your tax refund or Christmas bonus. This is a great time to remember the first rule of finance: Pay yourself Therefore, whenever you come into money, be it a sudden windfall or just your latest paycheck; be sure to designate a set amount in advance to go to your retirement account. By laying out its purpose ahead of time, you’ll be less tempted to spend it on something else, and you’ll be able to put more aside for your retirement.
- Take Steps to Pay Off Your Credit Card Debt. Your credit card is a thorn in your side and a major obstacle to serious retirement planning and money saving. The sooner you can get your debt paid off, the more you’ll be able to put into your nest egg. The first step is to stop charging new things to the card, as this will negate any progress you make in paying it off. Then, rather than simply making the minimum payments each month, figure out just how much you can afford to pay this year, and do so. Pay off cards with the highest interest rates first, then proceed to the next, and so forth.
Retirement planning and saving aren’t some strange voodoo that can only be done successfully by financial geniuses. It’s not something that has to elude you. With a little bit of planning and dedication, you can make at least one 2017 New Year’s Resolution you’ll be thankful for for years to come.
