“Don’t worry you have plenty of time to save and make money.”
You have probably heard this statement, or even said it yourself, at some point in your life. But this is a lie. Most people start worrying about their future income when they are in their thirties or forties without realizing that they have wasted precious years of compound interest. Teenagers on the other hand see retirement as way too far to plan in advance and prefer to think about the latest games, clothes or cars to spend their money on. Fair enough, but there are ways to have both.
Telling your teenager to start saving for retirement is only going to draw strange looks and a bunch of “yeah whatever.” However, educating your teens on saving and spending for life is one of the best things parents can do. Bestselling author of Your Mortgage and How to Pay it Off in Five Years by Someone Who Did it in Three, Anita Bell says, “I bought my first property— a vacant block of land—when I was sixteen, paid it off in a year (even though it cost more than I earned that year) and started saving up to build on it.”
Ok, you’re thinking there’s no way I am saving all my hard-earned income for the future. What about today? And you’re right, life is short and you have to live it—a bit. Saving for the future doesn’t have to be difficult or put a huge strain on your social life if you don’t want it to. The great thing is you only need to start with 10% of your income. Yes, you heard it right, 10 % or even $10 per week.
The most important thing to get started is to have objectives. What do you want to achieve and in what time period. Know how much you can save and start right away. Ten dollars this week might not seem like much but a year later that’s $520. Ten years later, its $5200 and forty years down the track it’s $20,800. Add compound interest and it’s even more. Anita Bell says that “Treats and entertainment are often the toughest and most regular challenge, but a ‘sanity allowance’ can help a lot by giving you a mini-budget within your budget to spend on all the treats that you enjoy.”
Today’s recession means that cash is king and those heavy in credit are the losers. Regardless of low interest rates, low doc loans, and the ease of getting a credit card, teenagers and young professionals should be thinking more seriously about their cash and their future. College, world travel, a wedding, or your first house is not that far away and earlier savings can make all these important life events so much easier and smoother to live through.
So remember, saving doesn’t mean taking a chunk out of your life, it takes small steps and time. If you can’t start with 10%, then try 5%. A few months down the track you can increase it. The more you save the better, but remember it only starts with a dollar a day, “succeeding so well in five years or less is a matter of deciding what is important to you—and wisest for you—and then making sure you have the money you need to enjoy yourself as well as get ahead,” says Anita Bell.
Tomorrow isn’t as far away as you think. Small steps toward your goals are what it takes to live comfortably today and tomorrow—no matter how far off that may be.
• Set Goals
• Save Regularly
• Reward Yourself
Katarzyna Radzka, was born in Poland and grew up in Australia. She’s currently a TEFL teacher in Warsaw and freelance writer. She loves travelling, keeping active, writing and meeting new and interesting people. Her work has appeared in The Australian Writer among others.