If you’re not contributing to a retirement account, don’t worry – it’s not too late. With a full-time job, there are plenty of ways to find extra money to put toward your 401(k) or IRA every month. Here are some better money management tips to start getting yourself on track for a secure financial future:
Maximize your 401(k) match
The most important thing you can do to save for retirement is maximize your 401(k) match. If your company offers a matching contribution, this is free money that can be used to boost your retirement savings and help make up for lost time–and it’s not even taxed!
If there aren’t any other benefits associated with investing through a 401(k), consider investing in one with good returns instead of waiting until later when it’s more convenient. The more time passes without investing now, means less growth over time due to inflation rates; not only does this mean higher taxes later down the road, but also less money available when needed most.
Contribute to an IRA
One of the best ways to save for retirement is through an individual retirement account (IRA). IRAs are tax-advantaged accounts that allow you to invest after-tax dollars and withdraw funds tax free once you reach age 59 1/2. They’re also flexible: You can use them not only for saving for retirement but also for education expenses or buying a first home.
Here’s the basics of how it works: First, contribute up to $5,500 per year ($6,500 if you’re over 50) into an IRA account–and don’t forget about any employer match! Then you’ll want to choose from among many types of investments within each type of fund offered by your financial institution. For example, there are many mutual funds that invest in stocks; some focus on large companies while others target smaller ones; still, others specialize in companies based outside the United States or internationally diversified portfolios that include both stocks and bonds.
While these numbers may vary by your age and work situation, SoFi offers a retirement calculator that can help you calculate when you can retire by, just by entering in a few variables such as pre-tax annual income and total savings.
Pay off your credit cards every month and avoid carrying a balance.
If you have credit card debt, consider paying it off as soon as possible. The longer the debt sits on a credit card, the more expensive it becomes–and if you’re carrying a balance month to month, that means interest charges are building up in addition to whatever amount you already owe.
A low-interest rate credit card can help keep those costs down, but even then it’s better not to carry any balance at all and just pay off what’s owed at the end of each month so you will owe no interest at all.
Put money into a taxable investment account.
Investing in stocks, bonds and mutual funds is a great way to grow your future wealth. These are the most common investment vehicles that you can use to grow your money.
Choose a brokerage firm or financial adviser who has many years of experience and has a good reputation in the industry. Make sure they have experience investing in the type of account you want to open and that they offer low fees on their services (brokers charge commissions; advisers charge management fees).
Additionally, make sure to choose an investment strategy based on your risk tolerance level: conservative, moderate or aggressive–then stick with it! For example, if you choose a conservative approach then don’t suddenly switch over to an aggressive strategy because something caught your eye on the news spontaneously; this could result in losses instead of gains over time because each strategy has different goals when making trades on behalf of clients’ portfolios.
Pay yourself first with money automatically into your retirement account
The best way to save for retirement is to pay yourself first by having money automatically deducted from your paycheck and deposited into a retirement savings plan or an emergency savings account. Before taking this step, look for a savings account with the best savings account interest rate. This way, you won’t have the option of spending it on something else because it will already be gone. Using this strategy will allow your retirement fund to grow each month. However, make sure your retirement fund is separate from an emergency savings account that you’ll need to use for sudden events such as losing your job. A retirement savings account should not be touched once it has money deposited into it.
Make the most of your future money today
If you’re looking to save for retirement, there are plenty of ways to do it. You can max out your 401(k) match and contribute to an IRA, pay off your credit card balance every month, or gradually add money into your retirement savings account. The key is to pay yourself first so that the money will be there when you need it most–and hopefully sooner than later!
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