Start a Savings & Investment Plan at the Beginning of Your Career
Get a Head Start on the Rest of Your Life
Most people are laser focused on the present at the beginning of their careers. They are adjusting to the unfamiliar while thinking about their most immediate goals. Reaching the next rung on the ladder of success seems a lot more urgent than planning for retirement.
That is totally understandable, even healthy. But it is possible to build momentum over the short term while also planning and preparing for the long term. And doing both at the same time does not have to put a huge drain on your time or available funds.The key is to start a savings and investment plan as early into your career as possible. Now that your professional life is on an upward track, you’re in the perfect position to put your financial life on the same track. Here are some benefits to following a systematic savings and investment plan rather than making vague goals and weak promises:
- Grow Wealth – The sooner you start socking money away, the sooner it begins earning interest. If this money is saved in the right places, it can grow substantially over the course of years. By not starting early, you miss out on an easy and automatic way to grow your wealth. For example, assuming a 12% rate of return, to have $1 million dollars saved by the time you’re 65, you would need to save $2.00 a day as a 20 year old ($730 annually) or $6.35 a day as a 30-year-old ($2,317 annually), while you would have to save $73.49 a day ($26,824 annually) as a 50-year-old.
- Achieve Discipline – Intending to save is easy. The hard part is actually putting money into an account and keeping it there. A savings and investment plan makes it easy to be responsible for approaching it in a systematic way. You can feel confident that you’re steadily making progress throughout your life rather than falling way too far behind. Consider splitting your direct deposit into checking and savings accounts or other ways to automate your savings.
- Mitigate Risk – The most reliable savings and investment strategy is to commit for the long term. Your money may be subject to dramatic swings up or down over the short term. But you can mitigate many of the most common and consequential risks by staying the course. The key is getting started early enough for it to be an advantage.
- Correct Mistakes – The whole point of a savings and retirement plan is to insulate a portion of your wealth from the gambles you make with the rest of it. If and when you lose money on a bad investment, hasty decision or unexpected expense, the money you have set aside helps to limit the damage and disruption.
- Establish an Emergency Plan – One accident or injury could put all your savings and investments in jeopardy. With documents like a Will, Durable Power of Attorney, and Health Care Power of Attorney, you delegate decision-making to someone you trust so that your financial well-being is not compromised along with your health. These simple safeguards help you to secure your retirement from life’s unexpected.