4 Things Millennials Can Give Up in Order to Contribute to Retirement

woman-391555_1920Investing in order to prepare for retirement is something that most millennials are not thinking about but they definitely should be. When it comes to investing, the earlier the better is the type of mindset that young people should have. The money you set aside to invest no matter how large or small will earn interest compound over time allowing you to end up with more than you started with and that’s after putting in absolutely zero effort. Once the money is in your account it can simply grow over the years and you can consistently add to your balance.

No one wants to work their entire live and you’re future self will be grateful that invested early when you feel ready to stop working. Don’t think you have enough to start investing today though? Think again. Those everyday items and services that you feel you need can wait. Saving and preparing for your future is very important, and you can also live for now and spend in areas that actually bring value to your life as well while cutting the dead weight expenses.

It’s best to set aside at least 10-15% of your annual income each year for retirement – maybe even more if you want to max out a 401(k) or another retirement account. Finding enough money to invest each month is not as hard as it seems. Here are 4 things millennials can give up in order to free up more of their income to invest in retirement.

1. Rent Housing Instead of Buy

If rent is cheaper in your area, you may want to keep renting and pocket any extra money you have at the end of each month. It’ no secret that buying a house can be expensive and even if your mortgage is low, unexpected repairs and maintenance costs can rack up quickly.

If renting will save you money and allow your finances to be more consistent for the time being, you may be able to make more progress with investing in retirement by remaining a renter. Sure, this is not the case for everyone, but buying a house is best to do after you’e got your finances in order and that includes making some progress with investing.

2. Skip your Daily Coffee

During the work week, it’s so easy to just pick up a coffee at the start of your day. It may seem like a small, meaningless purchase initially but the problem is it adds up. Let’s say you purchase a coffee each morning for four days straight. That’s at least $20 per week or $80 per month spent on coffee. If you bump that up to 5 days, that’s $100 per month.

Instead of spending that much money on coffee each month, purchase a $20 coffee machine and some coffee grounds so you can make your own at home each morning and invest the difference. This way you can start getting your caffeine fix for the day even before you hit the road and you’ll be doing your wallet a huge favor.

3. Ineffective Gym Memberships

Cancel out any memberships that you really don’t use and choose other free methods of exercise instead. Calculate how much you’re truly getting out of your gym membership by dividing the total price by the number of days you go to the gym. Some people will realize after they sign up for a gym membership that they are too busy to go there and workout. In that case, continuing to pay a monthly fee is a huge waste.

It’s nice to get out of the house and exercise, but you can spice up your workouts in much cheaper ways by using workout videos at home and jogging or doing yoga outside if the weather permits. After you get to a comfortable savings amount and get some momentum going with investing you might be able to go back to a membership if you still like it, but don’t let your health deteriorate either way. Continue to exercise regularly and eat well.

4. Avoid the Extra Cable Packages

Cable companies will tempt you with movie or sports packages every once in awhile, but it’s just way too pricey these days. Free trials are another major temptation, but if you truly don’t watch that much television, you may not get a lot out of fancy cable packages anyway. Most people are switching from cable to apps like Netflix and Hulu these days anyway and it’s worth a try if you haven’t already.

What have or would you give up in order to have more money to invest in your retirement?

Posted in: Retirement

Top of page