How to Save Money for Your Retirement Fund

retirement-couple-new
Image adapted via iStock

Where is your money going? Does your job offer some kind of retirement plan?

My husband's previous employer worked with a financial planner who offered his services to any employee interested in building a retirement fund. So, for years, a portion of my husband’s paycheck automatically — before taxes — got safely stashed away for retirement. Aside from the retirement fund, a small, but consistent, percentage of money was added into our savings accounts. And then job loss happened, and so everything quit growing. Dang it.

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For a while, we lived off of our savings, which got me thinking: What if I were still a single mom with a job that paid just enough to afford my bills and a few essentials. What then? How could I save for an emergency, let alone save anything for retirement?

It's a scary thought, but you can do it.

budget
Image via iStock

Eliminate what you don't need in order to free up some of your hard-earned money so that you can put it toward something greater in the future.

Are you familiar with smart moneyman Dave Ramsey? Let me share some of his advice with you.

Mr. Ramsey's first and foremost suggestion for starting a retirement plan is to start getting serious about paying off debt.

Paying down debt is difficult when you have so many other things to pay for — it's kind of overwhelming and can make you believe that you have no extra money to go towards debt and savings.

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A while ago, I wrote a post about living on what you make — it's about how to live within, or rather, below your means — paying only for what you need and then getting rid of what you truly don't need. So do this: get rid of what you don't need in order to free up some of your hard-earned money so that you can put it toward something greater in the future.

piggy bank savings
Image via iStock

15% is not a lot, but over time, it builds into an impressive sum.

Save, save, save!

Dave urges everyone to diligently put away at least 15% of your household income into a retirement-specific fund — whether it's a 401K, an IRA, a mutual fund, etc. If you have none of those things at the moment, you can put that amount into a savings account and then don't touch it. You can decide where to put it later. 

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Keep in mind that this 15% is just for retirement. Build your savings separately. It is suggested that you have at least $1,000 or three to four months' worth of income in an emergency fund. More than that will offer a lot of comfort and is worth the sacrifice. Trust me.

If you're lost as to how to start putting your money into an emergency savings account, and even if you're not sure if 15% towards a retirement fund is doable now, you can start out with this plan that Kathy featured. I love it because it starts you out by saving a tiny amount and slowly eases the saver into saving larger — slowly showing you that you can actually save more than you thought. If you have a dollar, hang onto it and look at this chart:

kathy's money chart
Image via Kathy Murdock

You can tailor it according to your means. Maybe you can only swing the first 26 weeks, and that's OK. Just start over if you need to. Or maybe you could try saving half of the amounts, starting with 50 cents and working your way up from there.  

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How do you feel about Ramsey's 15% plan? Do you like the 52 Week Money Challenge?

How would you like to start saving for your retirement and emergency funds?

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How to Save Money for Your Retirement Fund

Melanie Denney lives in the smallest of towns, with her two little darlings. She has a Bachelor's degree and happily works as a full-time mother and a freelance writer, specializing in sociology and recreation leadership. ... More

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