By Audrey Korir
I know some of you are thinking; it’s a life-time away, I don’t need to start planning for it just yet!
But is it ever too early to start securing your future to financial independence?
Not in my opinion. The best time to start retirement planning is the day you receive your first salary.
Doing this in your 20s simply means that you have enough time to start good financial habits. For example, compounding savings where you save a little now and reap big rewards later.
And in your 20s, you may not have serious bills to pay or even a family to support, so saving is easier.
Don’t pass up the opportunity to get a jump-start on saving for your retirement!
Here are 4 easy ways to start maximizing retirement savings in your 20s;
1. Start Saving Today
The key to saving money is simple: spend less than you make.
A crucial habit to learn while you are young that will follow you throughout your adulthood is to live below your means.
The longer you put off saving, the more it will set you back in the long run. Take a close look at your budget and look for areas where you can cut on spending.
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2. Invest in a career
It is unfortunate that sometimes the main reason why people want to be employed is to earn a salary and not to build their careers.
Mr. Perminus Wainaina, a Career Coaching Expert from Corporate Staffing Services advises that while money is a key factor in choosing what to take, it should not be a deciding factor.
“Before you take a job based on the money, consider these 3 key factors; future career plans– does the job you are taking align with your career goals? Job satisfaction- do you look forward to the job when you wake up? And finally growth opportunities– if you take the job, will you be able to grow and advance your career?” he adds.
He also urges professionals to spend the many years they spend at the workplace to instead shape something of their own that they can fall back on when they finally retire.
3. Avoid debt or plan to pay it off
The rule of thumb for staying out of debt is not buying anything you cannot afford. But in these hard economic times, that’s easier said than done. If you do have debt, or if you need to use debt for a major purchase, have a formal plan to get out of it.
One way to do this is by reducing your spending. Find places where you can cut costs responsibly, like opting to make your lunch or coffee at home instead of buying.
4. Understand compound interest
One of the most valuable things you have in your 20s is time. It is far easier to grow money over 50 years than over 25. In any account that is either invested or accruing interest, having more time to let the money grow could mean doubling, tripling or even quadrupling your savings.
If you are still asking whether it’s still too soon, my answer will always be no. Start preparing as soon as you start earning an income and you’ll be better off in the future.