A year ago if I asked someone to go and have a beer with me, and they repeatedly told me ‘No, I don’t have the money’ I would have complained about them. I would have thought bad of them. My general opinion of them would be greatly reduced and I would have let everyone around me know how ‘cheap’ they were being. My reasoning behind this was because everyone I work with makes almost the same amount of money as I do +/- $5,000 per year. So if I could afford to go out so could they. Solid logic.
Back then I figured I knew everything there was to know about finances. I thought I was doing OK, especially because I dabbled in the stock market (and lost on penny stocks). I had a small pile of savings. In my mind, I had it made. However, my biggest flaw was that I reasoned that living in the now was more important than the future. You know, we might not be around in ten years right? (Funny how that now I could argue until I turn blue in the face against this thought process)
Everything changed when I realized that if I continued on the road I was on I would end up being buried in debt. Something clicked in my mind – just because I can afford to go out, doesn’t mean I should. But the biggest revelation was that it made more sense to save now so that I could live and enjoy more experiences when I am older. This now seems like the best option. I can retire at age 44 (2 months off from 43 so close enough) which is still very young. My view on money changed that day.
Now saving for my future is my priority. I am much more conscious of my choices and try and base much of what I do now to reflect positively when I am older. So far I feel as if I am doing a good job contributing to my retirement.
If I can contribute the same amount to savings, as I am currently using to pay off my credit card debt by the time I am 44 I will have $217,070 provided a steady rate of return of 4%. This is not including my RRSPs either which I contribute $2400 a year to. At my current rate of savings I should be able to save roughly $300,000 by the time I am 44. I will also be eligible for a pension at that age. So on top of my savings I will be entitled to 60% of my salary. Also I am entitled to a $10,000 raise next year. I can see no reason (aside from buying a house) as to why I would not be able save most of this. I think these are conservative numbers considering most people like using 8%.
For those of you in your 20s, did you ‘click’? Are you on track to meet your financial goal?
I can’t say I really clicked until the last year or two. So just into my 30s. It seems all too common for people in their 20s to have mindset of living in the present. While I do think you need to enjoy yourself in your 20s, it is also the best time to start saving for retirement. At some point you need to try to get some balance in your life.
Modest Money recently posted..Mid April 2012 Blog Update
Balance is definitely key!
I just realized that when their was money in my wallet or my account that I hated when it left. So now I focus on keeping the money I have and getting more of the money I don’t have. I think paying my first tuition bill, just the size of it made me realize that if I wanted to have any money I would have to change things.
Poor Sturdent recently posted..Great Canadian Rebates: Rewards For Spending
I cannot even imagine having $20,000 (or more) in a single loan. It is for school but I don’t think I would be able to look at an amount that high. My car is that high but luckily for me my loan is with another bank so I don’t have to look at it very often.
I seriously thought about being more financially responsible after my ex and I broke up and I had to take care of our 2 babies on my own. I’m in my mid20s and I’m tired of living from paycheck to paycheck so I don’t go out as often as I did before.
reese recently posted..Citi Thank You Preferred Card Review
Living paycheck to paycheck is extremely tiring. I am glad that I got out of it quick.