Combating The Financial Mistakes Of Our 20s And 30s
When you're a twentysomething, long-term financial planning is often not a high priority. 1. Not planning Your Big Purchases (Or, buying more than you can afford): The problem is you are ready to pay the EMIs but not prepared to SIP, save and purchase. In Alaska, bush planes are a necessary way of life for people living in many of the state's most remote regions.
With so much going on with work and life, it's easy to focus on the here-and-now and put aside your bigger financial goals. Consider this: if you invest $1,000 a year between the ages of 25 and 35, at approximately 7 percent interest a year, this $10,000 investment will earn you nearly $113,000 by the time you are 65 years old.
If you manage to sock away $600 a month for the next two decades and your investments generate an average annual 7% return during that time, you'll be sitting on close to $300,000. There's time to recover from money mistakes in your 20s, but planning now can help you in the long run.
It may be hard to focus on retirement when it's so far off, but your 20s and 30s are the best time to begin growing your nest egg. Use your income to pay off all loans and credit cards and get rid of debt for good. More importantly, maintaining a large house often means sacrificing on education, travel,and retirement a financial planner I've noticed that my clients who are best prepared for retirement are those who own modest homes relative to their incomes.
Ensure you have enough coverage to cover any outstanding loans (i.e. mortgage, student loans) and money to cover traps several months living expenses if your wife needs to find a new job to fill the income gap. In 2008, many people approaching retirement watched in horror as their savings were swept away by a wave of financial disruption that washed onto Australian shores from the US.
Being in your 40s without retirement savings isn't great, no matter how you look at it. But rather than lose your cool, or worse yet, resign yourself to the notion of never getting to retire, take steps to get a handle on your finances and make choices that allow you to start banking some serious money.