Financial challenges have a way of taking a toll on you. They can cause physical, emotional and mental stress and make you feel discouraged. If your 401k savings is looking depleted and your hope for a financially secure future seems to be dwindling, don’t worry, you’re not alone. The American Psychological Association reports that 72% of Americans stress about money – and this number is not exclusive to just the middle and lower class. According to the study, even millionaires stress about finances often.1
Money is also the leading cause of stress in relationships, and 35% of people say they experience friction in their relationships due to finances.2 When it comes to long-term investments and retirement planning, Debt.com reports that half of Americans have less than $2,000 saved for retirement, while 36% don’t contribute anything to their retirement account.3
So, we see all the problems that money can create, but is there hope? Are there ways to establish long-term financial security? The answer to this question is yes. At Grantham University, we want to help you secure your future. Here are some saving tips you can use today as you begin planning for your retirement.
1. Break out of the “If” Mentality and Begin to Ask “How”
To truly invest in your future, stop considering if you are going to save and start asking yourself how. Make it a priority – the same way that paying your electric bill or putting gas in your car are priorities. Once you decide that you will save, you can take the next step in determining how.
If you’re in your 20s or 30s, your “how” may be something simple like investing 10% of your paycheck into a 401k plan that your employer matches. If you’re in your 40s or 50s, the steps you take may be a bit more aggressive. At age 50, you can make annual “catch-up” contributions to your retirement fund to grow your 401k savings quicker.4 This, along with selling assets and developing a new budget, are some other options, too.4 Either way – whether you are starting early or late – you must develop a detailed strategy to reach your financial goals.
2. Create a New Budget and Stick to It
Sometimes the reason we overspend is because we underestimate our daily expenses and can’t resist immediate gratification. Creating a new budget you are committed to can help grow your savings. Be sure to make your budget detailed and include everything from food to your mortgage to your kids’ diapers.
Here’s another quick tip: Research shows that people do a relatively good job budgeting their daily expenses, but overspend during special occasions that occur throughout the year, which is why they don’t save as much.5 To avoid this, calculate vacations and special occasions into your budget and commit to being a money-smart shopper — yes, that means taking the extra step to look for those deals for special occasions. Remember, giving up immediate gratification can secure funds for your future.
3. Set Up an Automatic 401k Savings Account
If you have a tendency to neglect saving, then setting up an automatic debit account through your bank or 401k provider can help you save money. Research shows that when employees enroll in an automatic 401k savings plan with a rate above zero, their retirement funds increase drastically; when comparing employees who opted in to automatic saving versus those who did not, participants were 40% more likely to increase their short-term savings.6
4. Don’t Play the Waiting Game
Let’s be honest, for the 99% of Americans who don’t make a million dollars a year, putting away a significant amount of your paycheck may not be appealing and, for many of us, doesn’t even seem feasible. With college loans, children, family and medical emergencies, car loans, mortgages, and more, saving can easily become something that is brushed to the side. But one of the biggest mistakes you can make during 401k planning is convincing yourself that you need to wait until you get your next pay raise to save. The time to start is now, and starting now can serve you well in the future. In fact, a Wells Fargo study showed that people who waited an additional nine years to start putting money in their 401k accumulated 51% less (about $600,000) in the long run.7
Start Your 401k Planning and Invest in Your Future Today
If you’ve played the waiting game for too long and haven’t been as committed as you should be to your 401k savings, don’t worry – there are still ways to become a saver! Four-year degrees are more valuable than they have ever been before and workers with four-year college degrees are making 98% more than people without those degrees.8 Start planning for your future with Grantham today.
For more information about our graduation rates, the median debt of students who completed the program, and other important information, please visit https://www.grantham.edu/disclosures/