While retirement may still be decades away and probably the furthest from your mind at this point, it’s never too early to start saving, giving your nest egg the most time to grow over time. It’s understandable that after paying bills there probably is not much left and putting it towards retirement is not first on your list, but if you can start out small and gradually increase from there, you will be doing yourself a huge favor now so you can make sure you have enough to life off when you do finally retire and be able to enjoy the life experiences that time is taken up by work.
Build Up an Emergency Fund
You never know when life will throw you a curveball and hand you over a huge unexpected expense, such as a vet bill, auto repair, or replacing an appliance. If you received a large bill now that you were not prepared for, it would likely go on a credit card, putting you in debt and now hit with a monthly payment that could be there for months, if not years, until the balance is gone. If you can build it up a few months of expenses in an account, you can give yourself the needed cushion if faced with these expenses.
Probably the best way to free up money is to examine what you’re currently spending and try to reduce from there, but what if you don’t know how much of your hard-earned money is going towards monthly bills, food, gas, or spending money? By taking a look at last month’s debit or credit card statement, you can actually go line by line to see where every dollar is going. From there you can take a second look to see which charges were absolutely necessary and which could have been avoided. Doing this month after month will put your spending more under the microscope more than it ever was, hopefully making it possible to free up money in response.
Put Together a Budget
After you figure out what you are currently spending and what you want to get to, you can put together a budget that will allocate funds out to the necessary places, even building in upcoming expenses that you know will occur, such as saving for trips, birthday presents, and even Christmas shopping. The more you can prepare in advance the better off you will be for taking on your budget and avoid putting any excess on a credit card.
Take Advantage of Credit Card Rewards
It doesn’t make sense to pass up free money in any regard, and especially when it comes to the purchases that you were going to make anyways. By getting a rewards credit card, you can earn points to use for gift cards, hotel rooms, airline miles, even some that give you cashback every year. Depending on how much you spend, that could add up to hundreds of dollars a year that you could free up to put into your retirement account that you were not previously.