I am supposed to save WHAT?! and by WHEN?!

Every piece of advice I received from the time I got my first job was… “Start saving now, you’ll thank yourself down the road”. As a young professional everyone tells me to save, save, save! Which is great, I totally agree, BUT I also own a home, have to buy groceries, food for my dog, clothes to continue looking professional, AND believe it or not I like to enjoy the odd night out. So all of this advice about saving has been great and I completely agree with it but I need a little more information and incentive to start. How much should I really be saving and what should I be saving for?

Retirement- It’s a no brainer, we all want to retire, and the goal is usually as soon as possible. An article in TIME gave age benchmarks for how much you should have saved and by when

http://business.time.com/2012/09/21/what-you-should-save-by-35-45-and-55-to-be-on-target/

 

Here are the guideposts:

•At age 35, you should have saved an amount equal to your annual salary.

•At age 45, you should have saved three times your annual salary.

•At 55, you should have five times your salary.

•When you retire at age 67, you should have eight times your annual pay

 

Scary right?… Ok, now I am freaking out. I’m already 26, so I have less than 10 years to get to my first benchmark! To make calculations easy let’s say I make $3,000/month or an annual salary of $36,000. This means in 9 years I need to have saved $36,000 (ahhhh!) That breaks down to $334 a month and because I get paid bi-weekly only $154 a pay. That’s actually only 11% of my salary which doesn’t sound scary at all. When you look at the big picture and the big numbers it can be very intimidating, but it’s helpful to break it down into pay periods and percentages.

 

Most articles and advice will tell you to save 15%-20% of your total income for retirement, and if you can do that, great! At this point though, I am liking the looks of that 11% so in the next 9 years I can buy the car I want, move into a bigger house, build a professional wardrobe and maybe even start a family which I KNOW is going to cost me. Once I get to those later benchmarks I should be in a good position to increase the amount I am putting toward my retirement and the nice part is I will already be on track for what I need to have saved!

 

Meagan Gray
Commercial Lending Officer
QuintEssential Credit Union

293 Sidney Street
Belleville, ON
K8P 3Z4
Tel:  613-966-4111 Ext. 290
Fax: 613-966-8909
Email: ac.uc1542295828q@yar1542295828gm1542295828
Visit us at: www.qcu.ca

 

Creating Financial Goals

Your parents told you to do it, your teachers told you to do it, even your neighbour’s relative’s dog walker’s brother told you to do it… but have you done it?

Becoming a young professional has been hard enough and trying to be taken seriously has been the focus of your entire thought process but now that you are well on your way, you should probably start thinking about what you are currently doing with your finances and what you should be doing with them!

Start thinking about it now, and developing habits to ensure that money you have worked so hard to make goes as far as it possibly can.

Retirement. Yes, you are a “young” professional which means this is probably quite a while away but something you need to be thinking about now in order to reach the goal of retirement and be able to continue to reach goals IN your retirement. Because of the way compound interest works, the sooner you start saving, the less principal you’ll have to invest to end up with the amount you need to retire and the sooner you’ll be able to call working an “option” rather than a “necessity”. This means if you have not started a savings plan for your retirement yet stop reading this and go do it right now.

Self-Control. In order to save for retirement you need to have some sort of money to put in to make that compound interest work! This means in some cases you may need to learn to delay gratification to keep your finances in order. It is so easy to purchase an item on credit the minute you want it, but it is much smarter to wait until you have actually saved the money to purchase it. Is paying interest on a pair of shoes or a bag of Doritos really a good idea? If you have been making a habit of putting all your purchases on credit cards stop now because you may find yourself still be paying for those items in 10 years. If you want to keep your credit cards for the convenience factor or the rewards they offer, that’s great, just make sure not to carry more cards than you can keep track off and to pay the balance in full at the end of every month. One simple rule… if you don’t have the money in your bank account to purchase it, just don’t. Credit is not free money.

Awareness. If you have any knowledge of personal finances you know it is important to make sure your expenses are not exceeding your income. Do you know where your money goes? It is important to look at your bank statement at the end of the month and make sure that a) you are not in the red & b) you are not wasting your money on unnecessary expenses. Once you have taken a look at where all that money is going it is easy to make manageable changes in your everyday routine that may have a big impact on your overall financial picture. In addition to everyday expense it is important to look at your recurring monthly expenses and see if there are changes that can be made there. Would foregoing the nice, posh apartment now mean being able to purchase a home in the near future?

You don’t need a fancy degree or diploma to be able to manage your finances. They are YOUR finances and YOU are the best one to take control of them. Start with these simple things and see what a difference they can make. Good luck on achieving your financial goals and check back for more tips soon!

20 Pieces of Advice You Need to Know

We found this great post by PR Daily. It captures the very things we need to think about as young professionals.

1. Establish your personal brand.
2. Seek out a mentor.
3. Keep up with the news every day.
4. Get away from your desk, and walk outside.
5. Plan the work before you work the plan.
6. Don’t pass up a chance to learn.
7. Go to your boss with a solution, not a problem.
8.Write thank-you and follow-up notes (handwritten, not emailed).
9. Travel any chance you get.
10. Be interested and inquisitive.
11. Remember that everyone carries their own sack of rocks.
12. Create your own personal style.
13. Stay in the loop, but avoid the gossip.
14. Look for “reverse mentoring” opportunities.
15. Looking busy doesn’t equal being productive.
16. A good editor will make you shine.
17. Don’t come to work sick.
18. Cultivate contacts outside work.
19. Take risks. It’s OK to mess up occasionally.
20. Strive for work/life balance.

Read the full article on PR Daily.