When we think about self-care, what usually comes to mind is enjoying a hobby, going out for a nice meal, relaxing in the outdoors, or perhaps buying something special. But what better way to practice self-care than by creating a life with as much financial flexibility and freedom as possible?
Unfortunately, while most of us want financial freedom, many of us are poorly prepared for the future. According to the Federal Reserve, one-fourth of all U.S. workers have no retirement savings. Whether you’re currently in this boat or not, we’d like you to consider the method of “paying yourself first.”
“Pay yourself first” means prioritizing saving over any other financial goals or needs. In other words, you’d automatically allocate a portion of your income to a savings or retirement account. If you talked to anyone who’s great at accumulating wealth, there’s a big chance that they always pay themselves first. So, before you pay a single bill or grab a fancy coffee, do you yourself a huge favor and make saving a priority.
Contributing to a 401(k) plan is a perfect way to pay yourself first. When you automatically place 10 – 15% of your salary into your 401(k), that money goes straight from your business payroll into your 401(k) account. Because you won’t see that money, you can’t spend it. On the other hand, if that cash is sitting in your wallet, you’ll be a lot more tempted to spend it on something you may not even need. As your nest egg builds, this can relieve a lot of financial anxiety about the future so you can focus on today.
If you’re already saving for retirement, great! Use this handy guide to see if you’re on track for a comfortable retirement, or whether it makes sense to increase your contributions.
| Your Age | Amount Saved for Retirement | |
|---|---|---|
| 30 | 1x Salary | |
| 40 | 3x Salary | |
| 50 | 6x Salary | |
| 60 | 8x Salary | |
| 67 | 10x Salary |
Another fantastic benefit of socking away funds into a 401(k) is that you can save tax-deferred, meaning your taxes will be lower this year and the money won’t be taxed until withdrawn in retirement.
Start thinking of new ways to pay yourself first, make it automatic and you can be the one that secures a nice, comfortable retirement. Need thoughts on budgeting that can help with better saving and debt management? Read How to Budget and Manage Your Money Smart.