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?