Money Matters: Planning Ahead

Thinking about retirement?

I know it’s hard to take retirement seriously when you’re significantly closer to starting your career than you are to ending it. Nevertheless, it’s not too early to think carefully about your financial goals.

Lets be honest, it’s not as exciting as, say, a beautiful new pair of shoes,and it’s probably never going to be.

But it is a worthwhile investment of your time and energy (and money). And besides, in 35 years or so, the newly retired you will want beautiful shoes too, but she can’t have them if you don’t put a financial plan in place now!

Invest in shoes for the future you!

My friend (and 4word Board member!) Erin Botsford is a true expert when it comes to financial planning. She runs a first-rate wealth management firm and just published a book!  I asked Erin what financial advice she would give a young professional, and here are her tips:

Don’t neglect your tithe.  It may sound counter-intuitive, but until you put First Things First, your other goals will be difficult to reach.   Be sure you give your first fruits to God and wisdom, strength and financial blessings will follow.

Get out of debt and stay out of debt. The interest you will pay on borrowed money often ends up costing you more than you think in the long run.  Work towards having no debt except for school and maybe a car loan.  Outside of those things, if you can’t pay for it today, you don’t really need it.

Make it your goal to save a certain percentage of your total income.  Set your goal today and stick to it.  Make it achievable but also make it substantial enough to start accumulating your own little nest egg.  You can put aside a percentage of your paycheck or a set dollar amount.  An easy way to do this is to have part of your paycheck deposited directly into a separate savings account by your employer, that way you don’t have to think about it and won’t be tempted to spend it.

Take advantage of your employer’s 401(k) match program if they offer one.  While the details of the program varies from place to place, many employers will match 50-100% of the employee’s contribution up to a certain amount.  Any money your employer matches with yours is essentially “free money” for you!

In your investments, take advantage of the power of compounding growth.  Buying dividend paying stocks is one way to give yourself growth opportunities as well as earning a return in the meantime if the stock stays flat or goes down in value.  If you are reinvesting the dividends you will be accumulating more shares of the stock which will help you build value over time.

For more great advice from Erin, check out her book, The Big Retirement Risk: Running Out of Money Before Your Run Out of Time, and her website, www.thebigretirementrisk.com.