1 million by the time you retire
The concern of every middle class person who retires is their future – how is going to pay for it! Well, several people work even after their retirement age having this huge concern in mind. This 5 simple step guide is designed for those who are young. This can enable them to save enough money for their future, that is, up to 1 million by the time you retire, at the same time enjoy their lives in the present.
You don’t need a high paying job for this to work out though, that’s the biggest advantage. Keep in mind this is not a get rich scam but a tried, tested and possible advice for those want to save 1 million by the time you retire. Through out this guidance note, we follow certain assumptions. One is that you are not fired, and second, your salary has a steady but not significant rise.
1. Start saving right now
Whether you save a huge sum or a small sum, start saving today. Dedicate a part of your salary towards savings. Let us assume you earn around 30,000 for now. Dedicate at least 10,000 towards your savings. This figure will eventually increase as you grow older with higher salaries, promotions, etc. Keep in mind always, a sudden cash flow in your life from something like a joining bonus, or profit on sale of your company’s stocks should go to your savings.
2. Keep yourself covered
This is one of the main tips one can receive. Dedicate a part of your salary towards insurance. The main reason behind this is that a constant outflow of known smaller amounts of money is much better when compared to an unknown amount of large money which you have to incur if anything goes wrong. Be it your house, yourself, your health, your vehicle, etc, keep it all covered. This is you second step towards saving 1 million by the time you retire.
3. Live a budgeted life
Once you know how much you earn, make sure you know where you spend it. This is the key to saving money. Say if you earn 30,000 make a clear split up of what you will do with that 30,000. Keep in mind always, your first expense must be your savings. Say you save 10,000. Now ensure you life your life that year with the remaining 20,000. The most important thing here, is to ensure you follow what you decide!
4. Reduce spending
You need to know yourself better than anyone else if you want to save 1 million by the time you retire. By knowing yourself, I mean “know your spending habits”. Look into every penny in detail and look at possible expenses that you can cut down on. Several people unknowingly sped a lot of money on useless things. Look back, introspect and see what you spend your money on. Maybe live in a cheaper apart, maybe drink less frequently, maybe anything that cuts costs, just go for it!
5. Keep money out of your reach
This is perhaps the most important point. Make sure every single penny you save is not within your reach. Invest in mutual funds, provident funds, etc. The basic idea is that if you on a spending spree, this will make sure your savings are still intact. One of the best methods to save to ensure you have 1 million by the time you retire is by investing in retirement funds. Retirement funds work in a simple manner, “You way us XXX amount every month till you retire, and we will pay you XXX+ amount each month after you retire”, since this also includes a life insurance cover, it is one of the most beneficial options.