They say that ‘life begins at forty’, but does that mean you should wait until then to start saving? The simple answer is NO! When we’re talking about putting money aside for your future, the sooner, the better.
The earlier you start saving, the sooner you take advantage of compound interest and the quicker your hard earned cash will begin working for you. A little sound financial planning before you hit 40 will give you a better chance of continuing the lifestyle you want well beyond your forties.
What’s stopping you?
So, knowing that, what stops people taking up the reigns and whipping their savings into shape at the earliest opportunity?
The truth is that, regardless of life stage, people are remarkably adept at painting their situation as scenarios that wave a dismissive hand in the face of ‘no time like the present’ by justifying either not contributing to that vital nest egg ‘right now’, or putting it off until a more ‘opportune moment’.
You can learn more about Financial Planning best practices here.
So, when is the right time to start?
Whenever you ask the question the answer is the best time to start saving is now! Have a read of our earlier post ‘5 recommendations to consider before you’re 30’; it’s essential reading regardless of your age. The post runs through some of the key principals of saving:
- Compound interest
- Preparation
- Some is better than none
- Rates matter
- Know what you want
It’s a good idea to have a look at what you’re spending to see how much you can afford to save. While there’s no substitute for professional help and advice, there are a fair few apps out there you can use to see where your money’s going like ‘Moneyhub’ or ‘Money Dashboard’.
Knowing what you’re spending gives you the insight and control to take simple steps to rationalise your spending and free up funds to put towards your future. A few quick wins to save more are:
- Cancelling subscriptions,
- Switching bill providers
- Replacing that daily Starbucks with home-brewed coffee.
If we take the coffee example:
When you price the average coffee at €2.50 and you estimate the average number of working days in the year at 261, you could save over €600 a year just by bringing in your own coffee. Doesn’t sound like much? If you think about this over 10 years, putting growth at 2%, you’d have an additional €7,000. This could be a pretty nice family holiday!
And finally…
Once you’ve committed to saving you’ll then have to decide where and how you’re going to invest. Investment vehicles are varied and eternally evolving. Bear in mind that, while historical performance never guarantees future performance, investments historically outperform cash savings.
If you get invested early, your forties are an excellent age to step back, take stock and make adjustments to ensure your finances are on track to meet your goals because there’s still time to make changes and for your investments to grow.
