Saving money is an essential adult skill that you must practice and employ in order to have the best life possible. There will always be instant gratification possible, but the key to feeling even a modicum of security is to establish a savings mechanism that allows compound interest to grow. A Roth IRA could be the solution that makes your golden years great.
Making contributions to your Roth IRA today will not save you on taxes in 2018, but it will pay off in the long run. You want to be sure that you are going to have a lower tax bracket in your retirement years than you have now. If so, the math will work out. Today, the contributions you make will come from after-tax dollars and you will not be able to write them off.
Still, making room in your budget for Roth IRA savings is very important. Saving early and often is essential to growing a nest egg that will sustain you and your family. The power of years of being in the market and gaining compound interest is significant. When you create your monthly budget plan, many experts recommend paying yourself first. That means making payments to your savings accounts and retirement funds before choosing to spend your income on pretty much anything else.
That can be a decision that is fraught with lots of ennui. What about debt? What about the car payment? What about going out with friends on the weekend? The answer should always be to pay yourself first. Who else is going to make sure that you are solvent in the future? There is no benevolent force out in the world, looking out for you.
Of course, when it comes to debt, be it credit card, student or other, it is best to never accumulate any. But if you have the unfortunate situation of being stuck behind a large mountain of debt obligations, you want to take steps to organize it in the most efficient manner possible. You still want to pay yourself first, but you also need to make sure that you are knocking chunks off that debt every month.
That can start with consolidating your debt. When you have 5 or 6 credit cards with varied interest rates, you can end up in a tangle web of monthly payments that just end up with you keeping your head above water. If possible, try to roll all your debt obligations together and get them down to one interest rate and one monthly payment. If you have equity in your house, you can take out a loan, using that as collateral. It might not be the most ideal situation, but you can take care of a burden.
If you cannot consolidate, you can try using the snowball effect. Focus on making large payments on the smallest balance, with the highest interest rate. Once you pay that off, you can focus your momentum on the next card and the next card and the next.
Paying off debt and freeing up your monthly income stream can help you fund your Roth IRA and get your financial life in order.
