Retiring from full time work is something that many people look forward to throughout their careers. Recently, however, it has been proven that this goal is not possible for most Americans. In fact, according to the study referenced in the infographic below, the average American at retirement age only has $95,776 saved! Even including social security, that is most likely going to cause a struggle to survive.
Preparing for the Future
How can a fate like this be avoided? What can I do to make sure I don't have to worry about money when I get older? The answer is simple. Start saving now. If you start saving money and investing at a young age, due to the rule of compounding interest, your money will be worth exponentially more in the future. If you are unsure of how compound interest works, just play around with the calculator below!
To start, here is an example that should be plausible for most people:
I start saving $200 a month every month from age 25 to age 45. This $200 could come from down sizing your home/apartment, meal prepping, or raising your income. At that rate, you would be saving $48,000 over the 20 years or $2400 per year. If we assume the stock market has a 7% growth rate over those 20 years, you will have almost $105,000 at the end of your 20 years! This is why it is so important to start saving as soon as you can.
“But Erik what if any of these things happened to me?”
- I didn't get a job relating to my field right out of school
- I don't make very much money
- I'm in so much student loan debt
- I'm living paycheck to paycheck
- I only work part time
- I didn't go to college
All of these excuses are just that, excuses. Getting a job relating to your college degree is most definitely a step in the right direction, but even with setbacks or hurdles, as long as you know how to handle your finances, you can gain financial freedom. With the right mindset and work ethic, really anybody can become financially independent.
Realistically there are many avenues where people typically overspend. The largest expenses will almost always be housing, transportation, and food. These are very important parts of life, but also very costly.
This website will aim to first, teach you how to cut costs in your day to day life, and then how to effectively use that money to make sure that you can become financially independent. You will learn how to get to a point where you will never have to worry about money again, by an age you probably didn't think possible.
Now that you're introduced to the financial portion of this website, stay tuned for the next post!