As we reflect on the past year and all the lessons we’ve learned in life, because of the pandemic, some of us have changed how we spend, what we spend and how we save.
With many of us getting a stimulus check soon, now might be the perfect time to assess your monetary health to make sure you are strong enough to get through whatever may come in your financial future.
Unemployment, illness, and several emergencies over the last year really hit some folks hard, especially if they did not plan and save ahead. That’s why it is so important to get your financial picture together now or at least as soon as you can.
“Time is your biggest advantage and as the saying goes, the best time to plant a tree was twenty years ago,” exclaims best-selling author and financial guru Rachel Richards. “The second-best time is today!”
Richards’ books “Money Honey” lays out steps for financial success and allowed her to quit her job and retire at the age of 27.
“If I gave you a penny and I told you to double it every day for a month, how much do you think you’d end up with at the end of the month,” asked Richards as she shares the power of compounding.
“A penny doubled every day for 30 days; you would end up with
US$5 368 709.”
“US$5 368 709,12 to be exact.”
The money that your money has already earned will make more money over time. The initial investment grows every day. Some say Albert Einstein declared compound interest to be “the most powerful force in the universe”.
Compound interest accelerates the growth of your savings and investments over time.
“When you look at finances in general, it’s very much this battle between instant gratification and delayed gratification,” stressed Richards.
You can spend all your money today but tomorrow will come whether you are prepared for it or not.
“Because it’s so far off in the future, we kind of want to live our life now and so we don’t think about retirement,” proclaimed Richards.
According to The Motley Fool, a private financial and investing advice company, you should expect to need about 80 percent of your pre-retirement income to sustain your standard of living in retirement. In other words, if you make US$100 000 now, you’ll need about US$80 000 per year when you retire.
“People get in their 50s they realise, ‘Oh no I wasn’t saving enough’ and it’s kind of too little too late,” exclaimed Richards.
“It’s really hard to turn yourself around when you’ve gotten to that point.”
Once you get rid of debt like high-interest credit cards, start saving immediately for that rainy day or emergency fund.
Make sure you take advantage of your company’s retirement savings plan or start one on your own. Also track your spending and make a budget and stick to it. — WAVE.