Although it’s never too late to begin saving for your retirement years, it is also never too early. While most college students are thinking about their life in the present, wise students will also have an eye on their future. Planning for several different stages of your future should begin as early in life as possible. It may require some sacrifices, but they will be well worth the efforts.
Planning for Retirement
College students are usually concerned with the next semester, paying for books, tuition, room and board, and maybe a second-hand car. Summer internships and where to spend spring break will certainly consume a lot of the student’s planning. However, if you’re interested in truly having a great future, you need to begin planning early. In fact, the earlier, the better. Even though your major may not involve finances, you may want to take a few electives on financial planning and investing. These can serve you very well as you prepare for your future. Early retirement planning is one of the most useful lessons you can learn about in college.
Tips for Early Retirement
For some, early retirement is just something to joke about. But the only reason people aren’t able to retire early is because they didn’t make a sound plan on how to make it happen. Knowing how to retire early is the key. Here are some beneficial tips that can help you make the right decisions about retirement.
- Cut unnecessary spending. It’s better to make sacrifices early in life so that you can enjoy your retirement. Cutting back on dining out, entertainment and new automobiles is a good place to start. Take a serious look at needs versus wants. You don’t need to have the best cell phone in the world — a basic model with limited features will work just as well as the one with all of those bells and whistles. Cut back on television by eliminating your cable bill. You can borrow movies from the library for free.
- Stay out of debt. If you have student loans and credit cards, pay them off. The longer you have them, the more money you are paying to your lenders. That’s money you could be using for planning your future. If you are out of debt, stay out of debt. A second-hand car that you paid cash for will work just as well as the new car that you had to sign a 5-year loan for. Indebtedness is the one thing that will be guaranteed to keep you from retiring early.
- Save. This is a critical step. Having a savings account will allow you put money aside for emergencies and planned expenditures. All of those extra dollars you save by cutting back on activities and fancy cars should be deposited directly into your account. You may also need to learn some self-discipline and refrain from borrowing from your savings. Not having enough money to go out to dinner with friends is not an excuse for dipping into your savings.
- Get a second job. The more hours you can put in while you are young and healthy, the more money you have to invest in your future. The more income streams you have, the more flexibility you have for paying off debts and saving for the future. There are a variety of part-time jobs of which you can take advantage that don’t require additional expenses. There are numerous online jobs that will allow you to earn a second income from the comfort of your home.
- Invest. The answer to growing wealth for your retirement is found in investing. Those college courses you took on investing and finances are going to pay big dividends, along with the investments you can make in the stock market, mutual funds, and other high interest resources. By starting when you’re young, you can look at higher yield and higher risk investments that will produce exceptional returns. You can begin early retirement planning in your 20s and enjoy the benefits long before your peers are enjoying theirs.
Check Your Credit
While you are working on your investment plan for the future, you should also be examining your credit report. You should request a free credit report from the three major credit reporting agencies – Equifax, Experian, and TransUnion – regularly. Knowing what your credit report looks like and how it is used to determine your credit score can help you with making future financial decisions. Have a credit check regularly so that you can monitor your finances for possible problems.
Planning for early retirement is something that you can begin working on in your 20s. By developing good financial habits, you can be on the road to financial security for the future.