As you start your first job, retirement can seem very far away. You may have 30 or more years in the working world ahead of you, but if you are financially able,now is the time to start saving. Establishing good financial habits now will benefit you throughout your career and into your retirement.
Saving is personal, and every person has different financial pressures, whether it’s student loan debt, car payments or rent and living expenses. But developing a budget and starting to save now can help you take charge of your financial future.
Here are some key tips to keep in mind as you kick off your career and your retirement savings.
See the big picture. It’s easy to spend every dollar you earn at first, without putting any money away. The good news is that, according to the MOOD survey, 83 percent of millennials report saving some money from every paycheck, even if it isn’t a lot.
Leverage retirement savings plans. You may have the opportunity to enroll in your employer’s 401(k) or 403(b) retirement savings plan. They may also match a portion of the savings that you put into the plan, as an incentive for you to save. If you don’t take full advantage of the match, you are turning down free money. If you are able, try to contribute at least up to the amount that the company will match. By utilizing your employer-sponsored plan, you are also reducing your taxable income, so you’ll owe less on April 15.
Seek education and expert advice. Your employer may work with a retirement provider that offers financial education, through one-on-one meetings with a retirement consultant, or have educational materials available online or in print. These tools can help you understand your investment options. Some plans offer automatic enrollment, deferral and contribution increases, as a way to enhance retirement outcomes for savers.
Think of your future first. When a big expense comes up, whether it’s a down payment on a house, a new car or something else, it’s tempting to borrow from your retirement savings, withdraw funds or stop saving altogether. By borrowing from your plan you could incur taxes and penalties related to not paying the loan back, and also lose out on market gains. At times like these, stay focused on your long-term goals and put your future first.