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4 Tips to Get Started Saving for Retirement

4 Tips to Get Started Saving for Retirement

We are all at different stages of life. For some people, retirement is just around the corner, and with that comes the worry that they may not be able to afford the lifestyle that they are either used to, or desire. For others, retirement is so far away, it rarely comes up in their mind and when it does, it is quickly put aside.

It shouldn’t matter how old anyone is when it comes to retirement. Retirement should be on everyone’s mind. Yes, the older you get, the closer you get to retirement. However, money put away when you are young ends up being worth a lot more when you are old due to compounding interest.[1] Saving up for a period of time doesn’t have to be hard or complicated, it is more about consistency. So here are five ways that you can consistently save money that can go directly toward your retirement fund:

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Side job

A lot of people will get a small side job where they make a few hundred dollars a month to put directly towards retirement. This will only take about 10 to 20 hours a month depending on how much you get paid, but it can have drastic results when it comes to retiring on time, or even retiring early. If you can start putting away a few hundred dollars every month at the age of 25, you will likely be able to retire at least 10 years early. Isn’t that worth working an extra hour or two a week?

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Change habits

Almost everyone has a few habits that they do almost every day that costs a small amount of money. For some people, it is that cup of coffee in the morning. For others, it is eating out at lunchtime every day. Whatever your habit is, it is now is the time to cut it. Coffee is one of the easiest daily expenses for many people to cut. You can find many cost benefits to cutting your morning coffee purchase and buying your own espresso machine instead. Not only is money saved, but there are other benefits as well.

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Just do it

Some people make enough money that they don’t have to make too many changes in their everyday lifestyle. They just need to start putting away a little bit of money each month. If this is you, then you are in the best predicament. If you are currently making more than you spend each month, a portion of that money should always be going towards retirement. It doesn’t have to be a large portion either, especially if you are young. The key to having enough money to retire with is not putting away large chunks at a time, but rather putting away smaller chunks for a lifetime.[2]

Buy a house

If you are still renting a house and have the ability to purchase a house, then it might be time to do so.[3] Many people retire early with the income from owning multiple homes. Homes have been proven to go up in value over time and have done so for over a hundred years. Sure, there are tough times when home values drop for a few years, but if you purchase a home and hold onto it for long enough, you will find that you save a significant amount of money that can be used towards retirement. When you pay your rent every month, you are probably paying for someone else to retire early.

The real theme of this article is to do something. It is always the best time now to start saving for retirement. Do what you can, and you will not regret it in the future.

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Reference

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Spencer Mecham

Personal Finance Coach, Digital Marketer

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Last Updated on March 4, 2019

How to Use Credit Cards While Staying Out of Debt

How to Use Credit Cards While Staying Out of Debt

Many people will suggest that the best thing to do with your credit cards during these tough economic times is to cut them up with a pair of scissors. Indeed, if you are already in huge debt, you probably should stop using them and begin a payback strategy immediately. However, if you are not currently in trouble with your credit cards, there are wise ways to use them.

I happen to really love my credit cards so I will share with you my approach to how I use mine without getting into deep financial trouble.

Ever since about 1983 when I got my first Visa card, I continue to charge as many of my purchases as possible on credit. Everything from gas, groceries and monthly payments for services like my cable and home security monitoring are charged on credit. Despite my heavy usage, I have maintained the joy of never paying any interest fees at all on any of my credit cards.

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Here are some tips on how best to use your credit cards without falling into the trap of paying those nasty double-digit interest fees.

Do Not Treat Credit Cards as Your Funding Sources

Too many people treat their credit cards as funding sources for major purchases. Do not do this if you want to stay out of trouble. I use my credit cards as convenient financial instruments so I do not have to carry around much cash. In fact, I hate carrying cash, especially coins. When you buy things on credit, the purchases are clean and you will not get annoying coins back as change.

I do not rely on my Visa, MasterCard or American Express to fund any of my purchases, large or small. This brings me to my golden rule when it comes to whether I will pull out any of my credit cards either at a retail or online store.

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I never purchase anything with my credit cards if I do not have the actual cash on hand in my bank account.

If I really cannot pay for the item or service with cash that I already have at the bank, then I simply will not make the purchase. Remember, my credit cards are not used as funding sources. They are just convenient alternatives to actual cash in my pocket.

Make Sure to Always Pay Off Balances in Full Each Month

The next very important part of my overall strategy is to make absolutely sure that I pay the balances in full each and every month no matter how large they are. This should never be a problem if the cash has been budgeted for my purchases and secured in the bank. I have always paid my full balances each month ever since my very first credit card and this is why I never pay interest charges.

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Using Credit Cards with Rewards

Most of my credit cards are of the “no annual fees” type, including one MasterCard on a separate account I keep at home as a spare in case I lose my wallet or incur any fraudulent charges. However, I do use a main Visa card which does have an annual fee because all purchases on that card reward me with airline frequent flyer points. For me, the annual fee is worth it since I do travel and I get enough points to redeem many free flights.

You have to decide for yourself if you will charge enough purchases on credit each year without paying interest charges to warrant a credit card that rewards you with airline points (or other rewards). In my case, the answer is “yes” but that might not be the case for you.

I occasionally use a MasterCard or American Express card on small purchases just to keep those accounts active. Also, I have been to the odd retailer that accepted only a certain type of credit card, so I find that having one from each major company is quite handy. Aside from my main Visa card which earns the airline points, the rest of my cards are of the “no annual fees” variety.

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So this is how I use my credit cards without getting into any financial trouble with them. This strategy is recommended only if you are not in debt, of course. In fact, it is worth keeping in mind once you’re out of debt so that you can keep your credit cards active and treat them responsibly.

What are your credit card usage strategies? Let me know in the comments — I’d love to hear what methods you use.

Featured photo credit: Artem Bali via unsplash.com

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