Depending on your age and current financial situation, time is critical for your future financial success. Obviously the younger you are the better the situation because you have more time on your side to start the process of investing in your future. You also have more time to cover the ups and downs of life in-general, including life changing events and the current climate of the financial world. Although you have a significant advantage starting out at a younger age, just getting the process started at any age is better than not doing anything at all.
For me personally, I never understood (or really bothered paying attention) to my long-term financial situation. This is unfortunately all too common with working-class folks like myself. I think a lot of people just assume that everything will just work itself out and something like Social Security (SS) income will provide for them after they retire. The reality of this proposition is frightening to me when you actually look at the sheer number of your SS benefit, in comparison to the type of living you are accustomed to.
It doesn’t take a mathematical genius to figure out that you simply can’t afford to maintain the type of lifestyle you currently have working now, with only a fraction of that income coming in from SS to live on. With that said, do the calculation yourself on paper (or in your head, because it’s really that simple) then start understanding the realization that you will need other sources of income to be able to come close to your current standard of living. As I mentioned earlier, it doesn’t really matter what age you are, starting right now is the key to moving forward. I certainly wish I would have started to aggressively save money and investing years ago, but raising a family and working pay check to pay check was my dilemma, like so many millions of other people.
The bottom line here is, start paying yourself first (saving money) every month. Even if it’s $10, $50, $100 every paycheck. Start there first, stay focused on this task, and never stop. The money will compound after years of saving and you will be shocked how much you can accumulate over time. Hopefully the money will be invested in an account that will give you a decent return on your investment. That is a discussion for many more blogs, but for now let’s keep it as simple as putting money in your savings account. After all, we all should have a savings account that can be quickly accessed in case of an emergency.
I can’t stress this enough, it’s very important to build up a savings account first, then investments will follow. Of course reducing/eliminating any and all debt is also the key to long-term success. Many more blog posts to come on that topic also. For now, get that savings account built up to a comfortable level, then consistently add to it every pay check. You will be amazed at how much it will grow year over year.