Growing up, every kid has the dream of becoming a millionaire and today, more than ever before, this dream is finally within reach. Savings and income are increasing across the board, allowing people to save and invest more to build their wealth for retirement. The number of people retiring with a million dollars plus has increased drastically due to the broadening awareness of managing and investing your money.
Unfortunately, the downside to this cycle is that people feel that the learning curve to understand how to manage their financials is higher than ever. People are being easily driven away from investments and understanding due to the burgeoning idea that financial planning is for the wealthy and the personal finance ecosystem requires a high dedication of time and resources. However, taking simple steps can easily lead to a start in financial asset growth. We have compiled a few key steps to take to start your investment journey.
Make a Financial Plan
If you want to achieve any goal, it’s important to plan how to get there. A financial plan is necessary and must be customized to each person as a one-size-fits-all plan will never accurately fulfill your individual needs and goals. This financial plan will set you on track to creating an accurate budget and understanding how money is flowing through your household. It can help show you where to pay off debt and where to put money into investments, as well as budgeting in for times to treat yourself without worrying about the guilt of having other obligations.
The most important aspect of financial planning is ensuring that the plan is flexible, and you update it every time something drastic happens in your life. Periodical evaluation is necessary to keep your goals aligned and get them back on track if they’re impacted by the market or personal factors.
Maximize your Contributions
The best way to build funds for retirement is to start saving as soon as possible. With a greater lump sum for investment, more opportunities become available. Even if you go the traditional route with a Roth or 401K, you should try to maximize your contributions to grow your wealth. It’s important to start putting money into any type of retirement account as soon as possible.
One way to increase your contribution is to check the benefit plans when accepting a job. Many companies will match your retirement contributions to a certain amount, an advantage that should be capitalized on while working. Any opportunity for free money should be taken when planning for retirement.
Playing the Long Game
We all like to see our money increase quickly; however, it’s important that you think long-term with stocks, bonds, and alternative assets. People get caught up in immediate unchanging investment numbers and become discouraged quickly, but retirement planning is solely about playing the long game. Your portfolio will move with you throughout the stages of your life, even if the mix of assets within it changes as you age. Although the long-term mindset works best, make sure to check on your accounts often.
Overall, don’t give up on your financial goals because of a lack of information or direction. You can figure it out! If you need more help, financial advisors are a great resource in your financial journey. They can help with initial choice in the program as well as how to add, budget, and manage your finances.
Regardless of how you choose to invest, start planning now to work towards fulfilling your dreams of becoming a millionaire by retirement.