It’s never too early to start building your nest egg. This can be tough to do in your twenties while you’re still in a low pay grade, but there are always ways to find a savings here and there. With help from financial advisers and experts you can make the most of what you earn in your 20’s and start building your nest egg early. The sooner you start, the better off you will be in the long run. Here are 5 tips to help you get going with building your nest egg.
Pay Yourself First
That’s right – tithe a portion of your pay away for the future before you spend it on anything else, even bills. It’s even possible to set up a separate account for these funds so they are locked away from your everyday transactions and you’re never tempted to dip into them. You may need to tighten up your budget to achieve this, but it can make a difference of over $1,000,000 when you reach retirement age. That ought to eliminate the fear of outliving your money which is a very real risk these days. Automating this feature can also help ensure it gets completed on a weekly, bi-weekly, or monthly basis.
Seek Out Appropriate Investments
If you’re in your 20’s you have plenty of time to build investments. You’ll be looking for long-term investments with low risk; you don’t have to worry about high-risk, high returns because retirement for you is a long way off. Take the time to invest in financial opportunities with appropriate levels of risk for your age. You have plenty of time to grow your earnings and the sooner you start building your nest egg the better. You should also adjust your investments as you get closer to retirement to manage your level of risk.
Keep Unnecessary Expenses To a Minimum
Your twenties are a great time in your life; lots of 20-somethings have no mortgage, or any large financial commitments of any kind. It’s good to be – and to feel – free. However, if you get disciplined about money early, not only will you evolve and age with good spending habits already in place, but you free up more of your money for investments. If need be, consider enhancing your skill set with extra study in order to increase your earning potential.
Make Additional Superannuation Contributions
If you can make additional Superannuation contributions (i.e. if you have the funds) it’s a very good idea to do so. You will receive a benefit for this at tax time, but the long-term benefit of securing your retirement fund is that you’ll be far more comfortable at the other end of your working life.
Take advantage of any and all discount schemes, reward programs, and Superannuation contribution matching schemes. Anything that frees up your funds a little, or gives you access to free money from others (like employee funded Superannuation contribution matching schemes) will help you build your nest egg.
Being in your twenties is one of the best times to start building your nest egg. You may not have the earning capacity of someone in their forties, but neither do you have the kids, the school fees, the mortgage or the second family car. Make the most of your freedom by all means – and put some of your cash into your future.
Do you have any tips for building a nest egg?
Note: The information provided in this article has been provided as general advice only. We have not considered your financial circumstances, needs or objectives and you should seek the assistance of your GPS Wealth Limited (GPS) Adviser before you make any decision regarding any products mentioned in this communication. Whilst all care has been taken in the preparation of this material, no warranty is given in respect of the information provided and accordingly neither GPS nor its related entities, employees or agents shall be liable on any ground whatsoever with respect to decisions or actions taken as a result of you acting upon such information.