Everyone wants to retire worry-free, and that means you need to have the right amount of money saved up beforehand. Building wealth in time for retirement requires some foresight, a little guesswork and a dedication towards sticking to the goal. Let’s take a look at five tips you can put into effect right now to start building your wealth in preparation for retirement.
#5) Reduce Expenses
We hear this one a lot, and for good reason. In our younger years (especially our 30s), it can be tempting to splurge on a brand new sports car, luxury vacations and a premium house. While it could be argued that you only live once, you shouldn’t burn out all your cash on materialism, lest you be caught in a tricky spot later down the road. Instead, identify areas where you can shave off expenses, especially for the long term. Downgrading a new vehicle purchase is obvious, but cutting back on your weekly coffee intake might not seem as noticeable. In truth, the little expenses can add up fast, especially when there’s more than one. If you’re going to take vacations, it’s best to plan ahead and identify ways you can save money. Keep the luxury vacations for a very special occasion, such as a landmark wedding anniversary, while going a bit more frugal the rest of the time. Any little bit helps.
#4) Increase Your Income
This tip is obviously a given if you want to increase the distance between living costs and money left over to put into savings. Take a good look at where you are in your career, and set goals for yourself. Try to ascertain if a promotion is in your future, or whether it’s time to change career tracks for a more lucrative position. Often times, younger workers mistakenly believe that if they stick it out with their current company for the long haul that good things will come their way. Sometimes this happens, but not always. Consider taking a short-term course to become qualified to take on a new job that pays a lot more. It may be a little stressful, but the short-term work you put in could dramatically affect your long-term earning potential. Similarly, a bit of side work can be beneficial to your balance sheet as well. Consider a flexible freelance job that doesn’t take up too much of your time, but can add more money to your bank account each month. The trick with increasing your income is to resist the urge to increase your spending curve, as well. Set limits and stay within them.
#3) Invest in Real Estate
Not everyone can manage this, at least not right away, but investing in real estate can yield huge gains over the course of a few decades. Many young people have enjoyed great success flipping houses, especially in a hot real estate market with high demand. Buy low, fix the house up without going overboard on costs, and flip it for a windfall. Others may opt to get into the condo or house market and rent out their properties, which can pay the mortgage off and lead to steady retirement funds later down the road. If you find you have a knack for the real estate sector, the sky’s the limit. Buy more properties if you’re able, and continue the trend. Each new purchase will give you invaluable experience that you can put towards a market which shows no signs of slowing down any time soon.
#2) Slice a Bit Off Your Paycheck
Believe it or not, this is one of the hardest tips to follow. It requires some diligence, planning and discipline to get right, but it’s not impossible. By taking a fixed percentage from each paycheck and putting it into savings, you can keep track of growing wealth in real time. To achieve success here, it’s advisable to make a list of all known monthly expenditures, from car payments to grocery costs. You can then break out the proverbial trimmers and do a little nipping and tucking to your monthly expenses to get rid of things you really don’t need. Once that’s finished, take some cash out for personal spending, and stay within that limit. Resist those all-too-convenient tap-to-pay debit and credit cards, as well. It’s far too easy to excuse using them for a morning coffee, and before you know it, your spending habits are out of control again. Once you develop a disciplined habit, this will soon feel like a normal part of your routine, allowing you to save money quicker, easier and with greater consistency.
#1) Take Risks Sooner, Not Later
If you’re keen to expand your investment portfolio beyond just the aforementioned real estate market, then you could be in for some significant wealth growth. The key here is to formulate a solid investment plan at the start and take risks immediately, rather than later on. When you’re young, you tend to have your health and wits about you, so if things do go pear-shaped during an investment run, you always have some breathing room to correct your course and recover. This gets harder down the road, especially when taking a risk means putting your children in the crosshairs. Safety investments are a bit of a myth, as every investment carries some form of risk. Try to mix less risky investments such as gold and precious metals with chancier investments like corporate stock. This can give you a little more padding while still giving you the opportunity to play the field a bit and see if the fates are on your side.
These are just a few tips to help you grow your wealth in time for retirement. It’s a combination of strategy, discipline, wealth management and the will to step out of your comfort zone and see where the wind carries you. If you’re planning for your future retirement and want to get started early, we encourage you to get in touch with us so we can assist you and your family on the road to success!