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Ask a twenty-something professional what's on their short list of priorities, and it's doubtful you'll see "retirement planning" on there. Then again, this is a time in life when choosing the right career path is a little more pressing than thinking about leaving it.
However, people in this age bracket are exactly those who need to be laying the groundwork for retirement.
At We Florida Financial, we're committed to providing our members with the tools and knowledge to create a successful financial future. With that in mind, here are a few ways to begin to prep for retirement.
It's simple and often repeated, but there's a reason for that; stowing away your expendable cash, month after month pays off in huge ways later. Many young people fresh out of college, balancing entry-level wages with student loans, rent and other living expenses, don't believe they have what it takes to start saving. But, consider this: a 25 year old who saves just $2,000 a year will have accrued over $500,000 by age 65. So, take stock of what you have at the end of the month; whether it's $100 or $20, get it into a savings account and see what happens down the road.
A lot of young people tend to ballpark it when it comes to the divide between money coming in and money going out. While there may be money left over at the end of the month, this lifestyle doesn't give you an accurate picture of where money is being wasted. Preparing for a successful financial future demands drafting and sticking to a budget. Get your list of essentials - housing costs, food, energy, car, etc - into a list, and cross reference that with your monthly income. Save your receipts for a month to get a grasp of where you spend your nickels and dimes. Chances are, you're spending much more on incidentals than you could, and if you know what they are, you can eliminate them and have a little extra money for that aforementioned savings account.
This one is kind of a no-brainer, but when you're in your twenties, excess is pretty standard. Clothes, restaurants, bars and other luxury expenses can feel like essentials, when in fact, they tend to gouge out a significant portion of income - income which can be put into a savings account. We recommend, once your budget is created, that you allocate a certain amount of your monthly earnings for fun, and stick to it. It might seem frustrating in the moment, but by not blowing $100 at fancy restaurants or movie theatres during the weekend, you'll set yourself on the right path to a truly leisurely retirement.
Successful money management isn't hard, but it can feel impossible at first. If you need a little extra advice on keeping your financial house in order, ask us. We're here to help!
Are you a saver? A spender? Leave us a comment and tell us about how you're planning for retirement!