You have finally completed that coveted university degree and landed your first full-time job. You’re probably already thinking about all the goals you would like to achieve financially and how you will be spending your first pay cheque. Chances are new work clothes; accommodation and maybe even saving for your first car are among your objectives.
However, Rose Miller, grants manager at the JN Foundation advises that chief among your objectives should be starting an emergency fund and saving for retirement.
“Naturally, retirement is not on the minds of most 20 year olds, but if you want to ensure that you have a steady source of income when you retire or have enough funds to withstand an emergency, it is important that you start saving from the moment you get your very first pay cheque,” she said.
Mrs Miller, who also leads the JN BeWi$e empowerment programme, says unfortunately many people discover far too late that they have not put aside enough funds to provide a cushion, in the event of an emergency, or for their retirement.
She notes that social pressures generally push persons to spend when they should be saving. However, she said it’s important for Jamaicans to inculcate the habit of thrift.
“No matter how much you make, at the end of the day, it is what you save that really matters,” she states.
Mrs Miller advises that to ensure that you are on the right track the general rule is to save at least ten per cent of one’s monthly salary.
She further recommends that a benchmark to adopt is that persons in their 20’s should aim to save 25 percent of their overall gross salary. “That includes retirement account contributions, matching funds from your company, cash savings or money you have invested elsewhere,” she explained.
Mrs Miller further advises that by age 30 one should have the equivalent of their annual salary saved.
“Therefore, if you earn $1 million a year, aim to have $1 million in savings when you hit 30,” she outlines.
The Multiplier Effect:
By age 35: Have twice your annual salary saved.
By age 40: Have three times your annual salary saved.
By age 45: Have four times your annual salary saved.
By age 50: Have five times your annual salary saved.
By age 55: Have six times your annual salary saved.
By age 60: Have seven times your annual salary saved.
By age 65: Have eight times your annual salary saved.
“While this may sound intimidating today, if you were putting aside savings to work for you, starting in your 20s, it’s not as difficult as it may seem,” Mrs Miller affirms.