On our journey to obtain independence and achieve financial success, we usually prioritize having good educational experiences, a sound resume and a career with a nice salary. The reality is that even with all this, we can still face financial disaster if we don’t develop good financial habits. The road to financial freedom requires practice and discipline. Here are a few simple steps to aid you on your journey.
#1: Start saving for your future… now!
One in four people your age will live to be 100. If you want to retire at age 65 consider how you will have the money to live for the following 30+ years. It is critical to start putting money away now to prepare for your future. The power of compounding was deemed the 8th wonder of the world by Albert Einstein and timing is the key to maximizing its power. Check out the difference in the two individuals in the graphics below. The first invested a total of $24,000 over 8 years from age 19-26 then stopped investing. The second started investing at age 27 and over time contributed a total of $102K in their portfolio. The difference in their totals at retirement is solely due to when they started. Even if someone can only invest a small amount of money it is worth it in the long-run.