During the global healthcare emergency, the aviation and aerospace industry has been facing the brunt. However, several other sectors have been hit hard by the pandemic as well. While it's great knowing that we're working to place food on the table, we are aiming for a good future for us when we're in our golden years. For employees of these types of industries, it's always an excellent choice to start a pension plan.
Saving can be a tricky situation, especially when you're in a position in your life where you will need to spend or pay off loans. On average, 33% of individuals ranging from 18 to 29 will have outstanding loan debt. Not only will you have to pay off your loan, but you also have to budget for your food and other essential needs while having a capable percentage for your wants. So while you're saving up, you should think of your monthly and long-term expenses from different facets of your life.
We get it: you want to live the most of your 20s partying, meeting new friends, building your career, and hopefully getting married. There's no problem with all of that, especially that you're at the peak of your youth. But of course, your 20s will be a deciding factor in the next few decades for your retirement plan. While it's great to focus on the present, it's also essential to set aside a bit of your income to safeguard your future.
The Game Plan
It might seem a bit too early to be thinking about your retirement, but starting as early as 20 years of age can yield the best results when you're retiring. We understand that it's not going to be your top priority, but it should still be on your list. It might not be the first thing that you should be thinking about, but as long as you're keeping it in mind, you can save a decent amount. Decades from now, you will thank yourself for being responsible for your retirement plan.
Of course, when we're talking about finances, we can't save up or spend based on our hunches and what we think is right. Having a plan that's based on hard numbers, data, and evidence will help draw a comprehensive plan for our future.
So what are some good practices to do in our 20s for a sound retirement plan?
Start Saving Today
There's a lot of reasons why we can't save money, but if there's a way, there's a will. Setting aside even a considerable percentage of your savings will help you in the long run. Sure, it might not seem like much of a priority when you might have to pay off your rent and the college loan that you applied for, but having at least a percentage for yourself can help.
Work smart, not hard. If you have the necessary funds that you can place on stocks, then you should do it. It might be true that investments are one of the riskier types of monetary pursuits; it can also get you far. The concept of investing is relatively simple, the more momentum that you get from amassing wealth, the more options you will have in making even more investments. Whether you're getting an increase in your investments or not, it's all about being able to take the risk and learning from it.
Your 20s is the best time for you to experiment. If you make some slip-ups in your investments, don't worry. It's part of the learning experience. You still have decades ahead to you. Knowing that you've learned from your mistakes will help you make better decisions in the 30s and 40s. Remember, you miss every shot that you don't take.
Emergency Fund on Standby
No matter how much we save for ourselves and our future, there will always be unexpected events in our lives. Especially during an economic crisis that's caused by a pandemic, we might have to reach out to our emergency funds to keep ourselves above the water.
Most financial advisors would not suggest heavily relying on credit cards or your retirement savings for something as trivial as your car's engine breaking down or needing to go for a vacation in a tropical paradise. Having a six-month buffer worth of expenses will help you through a rainy day.
Yes, starting in almost any endeavor can be scary, but once you've made a decent amount of traction, you can invest and save even more. Again, there's no hurt in trying to build momentum when you're on your 20s. When you're in your 30s and 40s, you'll realize that you will only have a fraction of that same energy that you used to have in your young adulthood. So it's best not to squander your time and energy on trivial things.