Do you dream about retirement? I do every now and then. I like to think about what my life will be like when I don?t have to work every day to pay my bills and instead I can relax, travel, and enjoy life to it?s fullest. But I know I won?t be able to make that dream come true without a lot of hard work now.
I?ve still got a ways to go to get out of consumer debt, about $15,000, and while that is my main financial goal right now, I haven?t let that stop me from saving for retirement and building my emergency fund.
Splitting my money between these three financial goals: debt freedom, emergency savings, and retirement savings, does mean my progress toward each is a little slower, but I?ve found that is that works best for me. Here are three reasons why you shouldn?t put off saving for retirement even if you are in debt.
Taking Advantage of a Match
The biggest reason I decided not to stop my retirement contributions was because of my employer?s 401(k) match. They offered a generous 6% match in addition to a 3% investment for each employee. The good news about their plan was that even if I decided not to participate they would be putting 3% into my 401(k) anyway. There’s no better money in my opinion than free money. 😉
I always participated in the 401(k) at my job because I wanted to take advantage of that matching money. Think about it ? if you put in 6% to get the full match you are automatically doubling your money right off the bat. There?s no other investment that can get you a guaranteed 100% return on your money.
There?s Always a Reason to Put Off Savings
One of the most common things I hear from people my age who decided not to start saving for retirement is that they are saving up for a big purchase ? like a house, a car, etc. The problem with this is there will always be a purchase or reason to delay saving for retirement. The moment you think you have your home and car repairs and maintenance finished something will break or need replaced. That?s just part of being a home and car owner.
Instead of putting off retirement savings to pay for these things you need to budget for both of them every month. That way you won?t have to scrimp on either of your financial priorities.
Don’t give into the belief you?need?to have a lot of money to invest. There are many online brokers, such as Motif Investing, that allow you to start investing with as little as $250 or less. If you don’t have the funds to start at that level, then budget a small amount each month til you do have the necessary funds. The earlier you start, the longer your money has time to grow and work for you.
Retirement Will Be Here Before You Know It
Time flies by very quickly and while retirement might seem like it?s a lifetime away, it will be here before you know it. Plus you won?t be ready when it?s time for retirement if you don?t start saving right away. It takes a lot of money to retire comfortably and not have to worry about money. It?s always better to overestimate expenses instead of underestimating them.
I started saving for retirement at 19?and I?m so glad I did. I may not be debt free yet, but it makes me feel better to know that I have money socked away in my investments?earning interest for the dreams of my future self.
What are your thoughts of saving for retirement while paying off debt? How much of a match does your employer provide? What are some common excuses you hear from others as to why they’re not investing?
Photo courtesy of: stevepb
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