By now, most of us understand the importance and need to save for retirement. And, people are beginning to put money away for retirement sooner in life because, the earlier you save, the better a retirement you can enjoy. However, saving for retirement and growing your retirement is often easier said than done, especially if you are dealing with financial demands which can make saving and wealth growing all the more challenging. If you are struggling to put money aside for your retirement right now, the good news is that there are several things that you can do to make the money that you do save work harder for you. Here are some of the best ways to start growing your retirement nest egg.
Open a Retirement Plan
Opening a dedicated retirement savings account rather than using a regular savings account is always an important first step. One of the best ways to do this is with a Registered Retirement Saving Plan or RRSP. Visit Wealthsimple to learn more about RRSPs in Canada, how to open one, and how you can benefit from using one for your retirement savings. With an RRSP, any money that you contribute to the plan is exempt from tax, helping you stretch your savings further by paying less income tax overall. The savings will only become taxable once you are retired and access the cash, but by this point, you will benefit from a lower tax rate due to your retired status. Weathsimple has more information on the other uses for RRSPs, including putting savings towards purchasing a property or funding further education.
Begin an Investment Portfolio
Investing your money is one of the best ways to take your retirement savings and help them grow. And there is a huge variety of investment options to consider, including many that do not require you to invest a huge amount of money when starting out. Bitcoin is a popular choice with those who want to grow their savings for retirement right now, since it is consistently growing in value and expected to be worth even more over the decades. And with the option to purchase a very small amount of Bitcoin at a time, investing in this popular cryptocurrency has never been easier. If you prefer the more traditional route, trading stocks, shares, or bonds are more ideal options.
Pay Down Your Debt
Many of us are dealing with some level of personal debt today, and it’s almost impossible for regular people to get through life without eventually owing money on a mortgage, personal loan, or credit card. There are many valid reasons to borrow money, but bear in mind that the cost of borrowing will increase over time the longer that the loan is open. And the longer you are paying off your debt, the harder it will be to maximise the amount of money that you are paying into your retirement nest egg.
It is worth taking some time to prioritise paying your debts off before you commit to seriously building your retirement savings. The debt snowball method is a great option for those who have various debts of different sizes. Using this method, you will begin aggressively paying off the smallest debt, which allows you to free up the money that you would normally use to repay it each month and put it towards the next debt up. Continue doing this until you only have the largest debt left and are able to completely repay it, leaving you debt-free. If you are concerned about paying higher amounts of interest on certain debts while repaying smaller cards and loans, the debt avalanche method is an ideal alternative. Instead of starting with the smallest debt, this method focuses on tackling the debt with the highest interest rates first.
Reduce Your Monthly Expenses
Taking some time on a regular basis to free up some additional cash each month is one of the simplest ways to make sure that you have more to put aside for your retirement on a monthly basis. Negotiating your monthly expenses and bills is an ideal way to do this. While certain expenses like your mortgage or rent might be difficult or impossible to negotiate, chances are that when it comes to expenses like utilities, entertainment, and insurances, you might not always be getting the best deal on the market and there will be the option to change to a cheaper deal. Use comparison sites regularly to see if there is anywhere that you could be saving money by switching to a different provider for certain monthly expenses. If you were tied into a contract that has ended, it’s a good idea to shop around for a new contract with a different provider as you will often be able to take advantage of cheaper new customer deals and offers.
Budget for Your Retirement Savings
Getting serious about your retirement savings and growing them as much as possible means being committed to putting a certain amount away each month. Budgeting for your retirement savings in the same way that you budget for other monthly expenses is the best way to do this. Consider how much you can comfortably afford to put aside for retirement, even if it is only a small amount each month, and set up an automatic payment to help you ensure that it gets paid regularly.
Sell Unwanted Items
Many of us are guilty of hanging onto items that we don’t need for a while, whether it’s the inconvenience of clearing things out or just that you simply don’t enjoy parting with things. However, the items in your home that are sitting unused could be helping to contribute to your retirement fund, not to mention freeing up more storage space for the things that really matter. It is always worth trying to sell anything that you no longer want or use. It is not only high-value items that will sell well; many low-value items are still highly sought-after and the money that you get for them will add up over time. From household furnishings that no longer match your décor to clothes that you haven’t worn in weeks, you can easily sell anything online using sites like eBay.
Make a Passive Income
Making a passive income is a great way to top up your retirement savings, without having to work a second job or cut into your free time. While setting up something that will earn you a passive income will usually always take some initial work, it’s definitely worth it once you get to sit back and relax, while watching your money come rolling in. There are plenty of opportunities to consider when it comes to making a passive income. Investing in property is one of the best ways to do this; however, if you don’t have the means to purchase a property to rent out, consider renting out a spare room in your home to a lodger. If you are more creative, you might want to consider writing and self-publishing an eBook, which will earn you money each time it is purchased and downloaded. If you enjoy sharing your knowledge on a certain topic with others, creating an online course that can be downloaded easily is another great way to earn a passive income, or you could set up an exclusive membership site that members pay a monthly fee to in order to access exclusive content and improve their knowledge on a certain subject.
Get a Side Hustle
In some cases, there is no amount of saving up your extra income that will make a huge difference in your retirement savings. If your finances are tight and you are barely left with any money to put towards your retirement each month, and have managed to get everything as cheaply as possible, the best thing to do is consider if there are any ways for you to earn some additional money. Getting a side hustle can be as simple as getting a part-time job in a bar, café, or shop in your local area outside of your main job work hours. However, you can also do something much more exciting including starting your own business based on a hobby.
If you are artistic or creative, consider selling your artwork or creations on a site like Etsy. Or, if you have a good eye for picking up a bargain, you might want to consider buying and selling on eBay or Amazon. If you have a unique idea for a product, your own eCommerce store can be a great side hustle idea, or you could start a blog about something you are passionate about and monetise it with ads, affiliate links and sponsored content. If you prefer to work offline, consider using your car to make local deliveries or signing up as a driver with Uber or Lyft.
When it comes to growing your retirement savings, there are plenty of options to consider if you want to make the money that you put aside work hard for you.