While the future might seem far away, the sooner you begin prepping for your future, the happier you’ll be. What you invest now has the potential to compound several times over by the time you reach your retirement age.
While millennials (born between 1982 and 2002) may be saving more than baby boomers (born between 1944 and 1964) and Gen Xers (born between 1965 and 1979), research shows that younger clients are not better prepared for retirement in comparison to their older counterparts. This could mean that Gen Y may not be able to retire as quickly as planned. Here’s what you can do to ensure a smooth retirement journey for you:
- Don’t go overboard while spending
One of the key things required for responsible financial planning is not living paycheck to paycheck. Work on finding room to cut costs, so that you can build a financial buffer quicker to not only support responsible spending but also increase your quality of life in the future.
- Learn good budgeting
If you’ve gotten a raise and immediately observe yourself spending it, it’s time you have a good look in the mirror and change your spending habits. There are several apps available that can help you with creating a budget. Or, you can consider availing the services of a financial planner who can help you to discover new ways to cut costs.
- Learn to manage your credit card debt
If you’re a younger millennial, chances are you might be just opening your first few lines of credit. A lot of credit cards offer cash-back or points incentive that you usually won’t get had you paid in cash or via a debit card. One of the major reasons why so many people get credit cards in the first place is to take advantage of 0% interest on your payments. So, work this incentive in your favor. And always pay your credit card bills on time.
- Start a 401(k) and pick your portfolio
Today, most employees are provided with a 401k plan as a retirement benefit from their employers. These plans are usually offered to full-time employees who have been hired for more than 90 days. A 401k is an investment account where you put money in, and your employer can also chip-in some, which is then invested. Mutual funds are one of the most common investment options offered in 401(k) plans. You can invest in equity mutual funds if you have a good risk appetite.
You can also consider investing in mutual funds. With so many types of mutual funds offered to an investor, you can never fall short of choices. Right from equity funds to debt funds to hybrid funds, you can choose an amalgamation of these funds according to your needs. Remember to always align your mutual fund investments with your risk profile, investment horizon, and financial goals. Happy investing!