We saved two more thinking traps for this section:
“I’m just scraping by. How can I save?”
“Why should I think about retirement right now. That’s four decades away!”
It may seem ridiculous to think about savings when you are struggling to get by, but just the opposite is true. . Saving for the future is a major part of successful money management. You may not be able to implement it to the fullest extent right now, but you should know about it and you may be surprised by what it can do for you, and what you can accomplish, even now.
We define “savings” as any money you put away for the future. “Saving” is also a verb and a habit we want you to get into. Saving money will allow you to build up funds that can have multiple uses, from the shorter term to the very long term. Adequate savings will allow you to withstand an unexpected expense, help you weather a financial hardship such as unemployment, achieve a financial goal like home ownership, and provide funds for your golden years when you retire.
Did I just say “golden years”? Yes, I did. Stick with me. One of the major components of financial planning is setting yourself up for when you retire.
THE PROBLEM: THE FUTURE IS COMING!
Retirement is coming whether you think about it or not–so it’s best to plan for it. You don’t have to have it all figured out now, but understanding your objective will help.
Think about the money you spend now. Housing, food, transportation, utilities, entertainment, et cetera. How are you going to pay for all the things you want to or need to spend money on when you are retired? You’re going to need a big chunk of money to cover your expenses for many years if you want to be able to truly retire. Your expenses will most likely cost a lot more money when you retire than when they do now. (Ask your grandparents about what they paid for their house.) Sadly, it seems very likely that social security benefits won’t be enough for most people to survive on.
This means that it is up to you to build a retirement fund to live off of in your golden years. No one else can do it or will do it for you. But before panic or depression sets in, let’s bring it to the HERE AND NOW!
One of the most powerful lessons in personal finance applies to you. The earlier you implement it, the more it will benefit you.
I call it THE GAME CHANGER!