October 2011

LeAnne Velona

Strictly for Students| by LeAnne Velona


Saving for Retirement

When it comes to saving for retirement, it is easy to think, "Why do today what I can put off until tomorrow?"

Although it is easier to push things off until tomorrow, given the state of the economy, now is the best time for cosmetology students and stylists to start saving money for retirement.

People are now living longer than ever, and the truth is that it is never too early to start saving and never too late.

The first step in figuring out how you can start saving for retirement is to look at your financial situation and debts you owe. The more money you owe, the less money you can save for yourself.

To get rid of student loans, pay off the loans with the highest interest rates first and pay low interest loans last. If you can, pay more than the minimum monthly payment so you can reduce interest charges.

The same rule applies for credit card debt. Apply as much as you can toward your credit card balance until you pay off your balance. Then do your best to keep future balances minimal. Pay off credit card debt before student loans.

Be financially savvy with the money you have. Get a free checking and savings account, and log your expenses. If you are using a debit card, keep an eye on fees associated with ATM withdrawals, overdrafts and transfers. Failing to track activity with your debit card can cost you since some banks charge overdraft fees rather than decline your card.

Before you start saving up for retirement, you should first have enough money saved in an emergency fund to last you six months. This will protect you in case you lose your job, or have to deal with a family emergency or illness. Once you have done this, you can start saving for retirement.

It can be difficult for stylists to predict their income accurately, so even if you can only afford to save $10 or $20 a month, set a goal and start saving. Start with a small amount that seems manageable and then increase this amount when you can (for example, when business picks up or you finish paying off your car).

People working in corporate jobs have it a lot easier when it comes to investing and saving money for retirement because they can set up a 401K through their employer. Stylists and students can create a similar setup by setting up an automatic monthly transfer from their checking account to a savings account. Since the money is taken out regularly, most people will not notice the change and will eventually build a nest egg.

Another approach is to keep track of your annual income and then put away at least 10 percent of what you earn for retirement. You may not be earning much money now, but your money can grow exponentially over time so the sooner you start saving, the better. Consistency is the key to obtaining results. Even if you have a slow month or two at your job, it is still important to save money for retirement.

Even if you do not have access to a 401K, your spouse may have a job that offers a 401K with a matching contribution. If this is the case, you should discuss how much your spouse is investing in this 401K so you can adjust how much you are putting away for retirement accordingly. You should also figure out what kind of life you are imagining for retirement, including at what age you will retire and where you plan on living. Make sure that your vision is in sync with your spouse's and then figure out how much money you will need to save for retirement to make this vision a reality.

Most importantly, you should get a good financial advisor. A financial advisor will help you figure out much money you will need for retirement, help you set goals for saving money and offer you tips for investing your money wisely.

LeAnne Velona, director of esthetics and massage therapy education for Marinello Schools of Beauty, has been a certified licensed esthetician for over 18 years and is also a licensed holistic health practitioner. Marinello Schools of Beauty offer cosmetology and esthetics programs at campuses in Arizona, California, Nevada, Oregon and Utah. For more information, visit www.marinello.com.