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3 Reasons Why Saving for Retirement Shouldn’t Be Scary

3 Reasons Why Saving for Retirement Shouldn’t Be Scary

Rent. Car payments. Student loans. There are plenty of reasons young adults are often stressed about money.

As a result, the thought of saving for retirement might seem laughable to some 20 to 30-somethings and downright scary to others. After all, the average Millennial has a hard time imagining a time when they won’t have student debt hanging over their head, let alone a time when they can leave the workforce. Plus, who wants to think about retirement when there’s so much life to live now?

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The truth is that saving for retirement shouldn’t be anxiety inducing at all. In fact, beginning your savings early will actually lead to a huge weight being lifted off of your shoulders in the long run. With that in mind, here are three reasons why you should stop worrying about saving for retirement and start doing it.

1. You can get free money with employer matching

If your job offers 401(k) eligibility, there’s a good chance they also offer some sort of employer matching or profit sharing. This is free money! However, in order to get that extra cash, you’ll probably have to contribute a certain amount yourself.

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When it comes to employer matching, every company is a little different. Some might match you dollar for dollar up to a certain amount, others might do 50 cents on the dollar, and still others might do a combination of the two. That’s why you’ll want to find out what the maximum percentage they’ll give you is and how you can obtain that amount. Then all you have to do is sign up.

Keep in mind that, while you’ll always be entitled to any money you put into your 401(k), your employer matching will likely be tied into what’s known as a vesting period. This could mean that you need to be with the company for more than X amount of years before you get to keep their contributions, or you might be able to keep a larger share with each passing year (20% after one year, 40% after two, etc.). Ultimately this could mean you lose out on some of the bonus money, but don’t let that dissuade you from opening an account in the first place.

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2. You can learn about investing

How much do you know about the stock market and investing in general? If you’re like most Millennials, then the answer is probably “not very much.” In fact, you might not even realize that, by having a 401(k) or IRA, there’s a good chance you’re already investing in the stock market.

Depending on the type of account your employer has or the type of IRA you open yourself, your contributions will likely be put into a mix of stocks, bonds, and securities. When you’re younger these investments can be more aggressive, which usually means a higher percentage of stocks that will fluctuate over time. Then as you get older, most people will move their balances into safer investments like bonds or money markets.

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While this process is mostly pretty hands-off, there is still a lot you can learn. For one, by watching your account (but not freaking out about the day-to-day ups and downs), you can see how stocks react to certain events, such as the Brexit or the presidential election. By taking an even closer look at your account, you can also learn about stock dividends and other terms you might have heard by turning on CNBC before the Shark Tank reruns came on. Ultimately this knowledge will come in handy should you decide to really up your investing game and buy stocks on your own.

3. You can watch your early savings grow into much more

The biggest reason to jump into retirement saving as soon as humanly possible is the amount of cash you’ll have saved up by the time you need it. By getting a head start on your contributions and taking advantage of compound interest, your small deposits will amount to a hefty sum that will carry you through the rest of your time on this planet. You’ve probably seen the TV commercial that demonstrates this idea using increasingly larger dominoes. While that’s not a bad comparison, looking at the actual numbers might do more to impress you.

According to hypothetical proposed by Business Insider, the difference between starting your retirement savings at 25 as opposed to 35 could mean you end up with double the amount of money when you reach 65. As they figure, if you started putting just $200 a month into an account with an average return of 6% at age of 25, you’d have just over $400,000 40 years later. However, doing the same starting at 35 would only result in about $200,000. Furthermore, the difference in principal contributed is only $24,000 ($96,000 since age 25 versus $72,000 since age 35). If this doesn’t get you to start thinking seriously about setting money aside for retirement now, I honestly don’t know what will.

Conclusion

When you’re in your 20s or early 30s, retirement is probably about the last thing on your mind. While it might seem strange, these are actually the years you want to not only be thinking about retirement but also start saving for it. Setting money aside for your later years doesn’t mean you’re getting old or that you’re wasting your youth — it just means you’d like to have some money to enjoy life after you’re done working. So what are you waiting for?

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Published on November 8, 2018

How to Answer the Tough Question: What are Your Salary Requirements?

How to Answer the Tough Question: What are Your Salary Requirements?

After a few months of hard work and dozens of phone calls later, you finally land a job opportunity.

But then, you’re asked about your salary requirements and your mind goes blank. So, you offer a lower salary believing this will increase your odds at getting hired.

Unfortunately, this is the wrong approach.

Your salary requirements can make or break your odds at getting hired. But only if you’re not prepared.

Ask for a salary too high with no room for negotiation and your potential employer will not be able to afford you. Aim too low and employers will perceive as you offering low value. The trick is to aim as high as possible while keeping both parties feel happy.

Of course, you can’t command a high price without bringing value.

The good news is that learning how to be a high-value employee is possible. You have to work on the right tasks to grow in the right areas. Here are a few tactics to negotiate your salary requirements with confidence.

1. Hack time to accomplish more than most

Do you want to get paid well for your hard work? Of course you do. I hate to break it to you, but so do most people.

With so much competition, this won’t be an easy task to achieve. That’s why you need to become a pro at time management.

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Do you know how much free time you have? Not the free time during your lunch break or after you’ve finished working at your day job. Rather, the free time when you’re looking at your phone or watching your favorite TV show.

Data from 2017 shows that Americans spend roughly 3 hours watching TV. This is time poorly spent if you’re not happy with your current lifestyle. Instead, focus on working on your goals whenever you have free time.

For example, if your commute to/from work is 1 hour, listen to an educational Podcast. If your lunch break is 30 minutes, read for 10 to 15 minutes. And if you have a busy life with only 30–60 minutes to spare after work, use this time to work on your personal goals.

Create a morning routine that will set you up for success every day. Start waking up 1 to 2 hours earlier to have more time to work on your most important tasks. Use tools like ATracker to break down which activities you’re spending the most time in.

It won’t be easy to analyze your entire day, so set boundaries. For example, if you have 4 hours of free time each day, spend at least 2 of these hours working on important tasks.

2. Set your own boundaries

Having a successful career isn’t always about the money. According to Gallup, about 70% of employees aren’t satisfied with their current jobs.[1]

Earning more money isn’t a bad thing, but choosing a higher salary over the traits that are the most important to you is. For example, if you enjoy spending time with your family, reject job offers requiring a lot of travel.

Here are some important traits to consider:

  • Work and life balance – The last thing you’d want is a job that forces you to work 60+ hours each week. Unless this is the type of environment you’d want. Understand how your potential employer emphasizes work/life balance.
  • Self-development opportunities – Having the option to grow within your company is important. Once you learn how to do your tasks well, you’ll start becoming less engaged. Choose a company that encourages employee growth.
  • Company culture – The stereotypical cubicle job where one feels miserable doesn’t have to be your fate. Not all companies are equal in culture. Take, for example, Google, who invests heavily in keeping their employees happy.[2]

These are some of the most important traits to look for in a company, but there are others. Make it your mission to rank which traits are important to you. This way you’ll stop applying to the wrong companies and stay focused on what matters to you more.

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3. Continuously invest in yourself

Investing in yourself is the best investment you can make. Cliche I know, but true nonetheless.

You’ll grow as a person and gain confidence with the value you’ll be able to bring to others. Investing in yourself doesn’t have to be expensive. For example, you can read books to expand your knowledge in different fields.

Don’t get stuck into the habit of reading without a purpose. Instead, choose books that will help you expand in a field you’re looking to grow. At the same time, don’t limit yourself to reading books in one subject–create a healthy balance.

Podcasts are also a great medium to learn new subjects from experts in different fields. The best part is they’re free and you can consume them on your commute to/from work.

Paid education makes sense if you have little to no debt. If you decide to go back to school, be sure to apply for scholarships and grants to have the least amount of debt. Regardless of which route you take to make it a habit to grow every day.

It won’t be easy, but this will work to your advantage. Most people won’t spend most of their free time investing in themselves. This will allow you to grow faster than most, and stand out from your competition.

4. Document the value you bring

Resumes are a common way companies filter employees through the hiring process. Here’s the big secret: It’s not the only way you can showcase your skills.

To request for a higher salary than most, you have to do what most are unwilling to do. Since you’re already investing in yourself, make it a habit to showcase your skills online.

A great way to do this is to create your own website. Pick your first and last name as your domain name. If this domain is already taken, get creative and choose one that makes sense.

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Here are some ideas:

  • joesmith.com
  • joeasmith.com
  • joesmithprojects.com

Nowadays, building a website is easy. Once you have your website setup, begin producing content. For example, if you a developer you can post the applications you’re building.

During your interviews, you’ll have an online reference to showcase your accomplishments. You can use your accomplishments to justify your salary requirements. Since most people don’t do this, you’ll have a higher chance of employers accepting your offer

5. Hide your salary requirements

Avoid giving you salary requirements early in the interview process.

But if you get asked early, deflect this question in a non-defensive manner. Explain to the employer that you’d like to understand your role better first. They’ll most likely agree with you; but if they don’t, give them a range.

The truth is great employers are more concerned about your skills and the value you bring to the company. They understand that a great employee is an investment, able to earn them more than their salary.

Remember that a job interview isn’t only for the employer, it’s also for you. If the employer is more interested in your salary requirements, this may not be a good sign. Use this question to gauge if the company you’re interviewing is worth working for.

6. Do just enough research

Research average salary compensation in your industry, then wing it.

Use tools like Glassdoor to research the average salary compensation for your industry. Then leverage LinkedIn’s company data that’s provided with its Pro membership. You can view a company’s employee growth and the total number of job openings.

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Use this information to make informed decisions when deciding on your salary requirements. But don’t limit yourself to the average salary range. Companies will usually pay you more for the value you have.

Big companies will often pay more than smaller ones.[3] Whatever your desired salary amount is, always ask for a higher amount. Employers will often reject your initial offer. In fact, offer a salary range that’ll give you and your employer enough room to negotiate.

7. Get compensated by your value

Asking for the salary you deserve is an art. On one end, you have to constantly invest in yourself to offer massive value. But this isn’t enough. You also have to become a great negotiator.

Imagine requesting a high salary and because you bring a lot of value, employers are willing to pay you this. Wouldn’t this be amazing?

Most settle for average because they’re not confident with what they have to offer. Most don’t invest in themselves because they’re not dedicated enough. But not you.

You know you deserve to get paid well, and you’re willing to put in the work. Yet, you won’t sacrifice your most important values over a higher salary.

The bottom line

You’ve got what it takes to succeed in your career. Invest in yourself, learn how to negotiate, and do research. The next time you’re asked about your salary requirements, you won’t fumble.

You’ll showcase your skills with confidence and get the salary you deserve. What’s holding you back now?

Featured photo credit: LinkedIn Sales Navigator via unsplash.com

Reference

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