Plan Your Budget Now to Save for Your Retirement
How you plan your budget in present helps you save dollars for the future. If you are serious about having a good quality of life after you stop working full time, it’s essential to start saving as early as possible. It is not necessary to find the best investment before one begins saving. Sometimes analysing various options prevents us from taking action i.e. to start saving. This is not to say invest blindly, however, pick a simple savings option and START SAVING! Start with what you can do on your own. For example, you can include your retirement saving in your monthly budget to start saving each month.
Figuring out your expenses post-retirement and if necessary, managing your current lifestyle will lead you to happy retirement life. Budgeting is a key aspect of your retirement planning and helps you identify areas where you can control your spending and start saving for your retirement. Take it as another monthly bill in your budget to save often and early.
The real question is how to manage your expenses when planning your monthly budget to save more often without compromising too much. Budgeting is all about laying out how much money and coming in and going out each month to figure out where you can trim unnecessary spending. Planning your budget means you are considering all income sources and expenses to drive a road map on how and where you can save some dollars for your retirement.
Keep track of your monthly expenses
It is very easy to determine how much money you earn each month and what are your income sources. But most of us will not be able to pinpoint how much and where they spend each month. Knowing where your money is going is the first step in budgeting. You can start tracking your expenses using any mobile app you find comfortable with to fissure out how much you spend and on what. It also helps you figure out how much you save more often each after paying all your essential bills on rent, food, loans, and utility bills.
When you start tracking your monthly income and expenses, you will have a more realistic picture to make more-intentional and unnecessary spending choices. This way you can save a little more each month to deposit in your retirement fund.
After figuring out your outflows and where you can downsize your expenses, you can prioritize your retirement saving each month. Divide your budget into three basic categories to spend your income and follow the “50/30/20,” budgeting approach in the order they are listed:
- Need to have: Spend no more than 50% of your income on daily essentials.
- Nice to have: Spend no more than 30% of your income on outings and entertainment.
- Plan-ahead: Save up to 20% of your income for long-term financial goals such as debt payment and retirement.
Saving can be a painful process as it can hurt your present choices. You have to make some tough decisions to secure your tomorrow. Budgeting is the first step in your retirement planning, and you should be very clear about your wants and needs. At New Age Investment Brokers, we can help you with financial planning and wealth management to secure your retired life with long-term financial goals. Give us a call to discuss your requirements.