7 Things You Can Do to Start a Retirement Fund
Over the years our experts have spoken to many individuals that believe they simply don’t make enough money to save up for retirement. All of their income is tied up in bills and debt. Saving for 10, 20, or 30 years down the road just doesn’t register as important.
We’re here to tell you that this couldn’t be further from the truth. While it may be true that no funds are available at the end of the month to add into a retirement fund, that doesn’t mean that one gets a free pass to avoid saving for retirement completely.
This article is full of reasons why you simply can’t afford to not start a retirement fund. We’ll even give you some ideas on how you can save for retirement, even on a bare-bones budget.
First, reassess your income and expenses. At UAE Money Expert, we believe that a strong retirement fund is more important than any luxury item. That means paying for a gym membership, or footing the cable bill every month, will always come second to adding in money for retirement.
You cannot give up on your retirement fund until you have performed an extensive budget tightening. This means being frugal about every purchase you make, cutting out the unnecessary luxury items in your life, and not going out to dinner so much. Yes, these things aren’t easy to give up. But when you do retire, you’ll be immensely grateful you had the foresight to do so.
Second, focus on debt first, then retirement. Debt will slow your retirement planning down immensely, especially when you consider interest payments. Using the snowball method (which we talk about here) begin paying off all debt, starting with the smallest debts and working your way up. Once you’ve paid your debt off, take all of the money that you used to pay off debt and add it into your retirement fund every month.
Third, trick yourself into saving money. The UAE is a very friendly tax environment. Compared to somewhere like the UK, you’re saving a lot of money every month that you would otherwise be sending to the government. One option is to simply imagine you are in a country with high taxes, and put that percentage away immediately into a retirement fund. You can also take any raises or bonuses you make and drop those into retirement immediately, and just imagine you never earned them in the first place.
Fourth, think small, and go from there. Even a modest sum of money saved up can entice you to keep saving. The more you add into your account, the larger it will get, and the more incentivized you are to add in additional funds. Try to work your way up to around 15% of your annual income, which is the ideal spot for retirement savings.
Fifth, use our UAE Money Expert Budget Calculator to identify places where you can save. The trick to saving money is to know where you’re spending it. Most budgets will only account for bills, and won’t necessarily identify how much you’re spending on food and entertainment on average. Our budget calculator will help you find out exactly where you’re spending your money, so you know exactly where to trim down expenditures.
Sixth, go extreme, make a major lifestyle change. If you’ve done everything you can think of and can’t find a penny more to save, then it may be time for a dramatic lifestyle change. Either you need to develop a new skill (to pursue an entirely new job field) or you need to make a move, hopefully to a place that will allow you a bit more financial freedom. These changes may seem difficult now, but they pale in comparison to retiring without any money in your account.
Seventh, believe in yourself. You may be struggling to pay all of your bills every month, and put your kids through school, and stay in a nice neighborhood. And even though you’re making it, you feel terrible about being unable to save for retirement. The truth is, you’re committed to being responsible, and you should never feel like a failure for the financial decisions you’ve made up to this point.
Now, you have a chance to make a change in your life. It may require some difficult choices, but you’ve been responsible before, and you can be responsible now. Cut back, make the life changes you need to make, and start saving, even if it’s just a little bit. You’ll be amazed at how quickly that small fund of money can turn into a large retirement fund. Keep saving and you can do it.
If you need help with any of the above points please do not hesitate to get in contact. Our Experts are always happy to help!