I’ll get right to the point in this point. The #1 thing you need to understand when it comes to saving for retirement is to start, like today! If you are reading this as a young person, let’s say 35 and below you should consider yourself lucky because you have the advantage of time on your side. If you are in you early twenties or teens this could drastically improve your future more than you can understand.
Delayed Gratification is Key
I totally understand that delayed gratification is about the last thing a young person wants hear, but it important. It’s difficult to make the decision to not buy the new car or take the trip you really can’t afford while most people around you don’t seem to even think about it regardless of if the have the money to pay for it or not. Just put it on the credit card right? Thats what everyone does, and I need to build credit. Wrong, so wrong!
By making the decision to stop impulsive spending on needless instant gratification you separate yourself from the masses that find them selves drowning in a sea of debt. If you were to instead of spending those funds redirect them into long term investments like a Roth IRA account, your are setting yourself up for a much brighter and happier future.
Understanding Good Debt vs Bad Debt
If you are new to this topic it might sound strange that “Good Debt” is a thing, I mean if you owe somebody else money how could that be a good thing. In my opinion, a home loan is really the only good kind of debt you can have because what you owe money on is going up in value resulting in you having an asset when the debt is paid off. There is also debt you could have a on growing business but that is a much more complex topic that I won’t cover in this post.
Now let’s talk about bad debt, which most people have. Bad debt includes credit car payments on a whole bunch of stuff you want but don’t need. These could range from a new car, truck or boat, expensive clothes, or even eating out at places you can’t afford. The reason people fall into this habit of bad debt decision is because of their desire for status. They want to enjoy the “good life” and be viewed as a successful person whether they can actually afford it or not. This a a dangerous trap to fall into that can often result in many years of stress and pain down the road. Even if you are in a bad debt mess, you can always decide to start making better decisions to turn it around, you just need to break that cycle and reboot with new wiser habits.
Choose a Fee Only Financial Planner
As already stated in this post, I’m not a financial planner and don’t plan on becoming one so I won’t be giving any specific investment recommendations. If you are at the stage where you are ready to start investing it is very important that you seek out a fee only financial advisor. By choosing a fee only financial advisor you can see in advance exactly what the costs will be, removing the risk of fees that are hidden in the fine print by other financial planners.
When it comes to selecting a fee only financial planner you will have a lot of options as they are growing in popularity for obvious reasons. I lived in Raleigh, NC for a few years which is where I found University Financial Strategies owned and operated by Mark Kelly who specializes in college funding and retirement planning. He was a huge help in getting me on the right track to tackling my previous debt and saving for retirement. Like I already mentioned you will have a lot of options and it’s best if you do your homework before selecting your fee only financial planner. Below you can see a video of Mark explaining what a fee only financial advisor is and why it’s in your best interest.