How I fully contributed to Roth IRA after moving out of my parent’s place
I grew up in a median household. The only bread earner was my father. From the very childhood, I knew about the importance of budgeting, as my father preferred to spend every dollar for a reason and wanted everyone to follow the same. During my college days, he retired with modest retirement savings. I didn’t ask my parents to fund my studies as the savings was for their future expenses.
I took a private student loan to complete the studies. Since the final year of the graduation, I was doing part-time job to deal with the student loan.
After completing studies, I left my parents place to join a company, in California, with whom I am currently working as an editor.
My current income is about $50,000 in a year. I took a rented apartment, which cost me dearly in every month. I don’t have a car yet; but still, the income is quite low to manage all the expenses including the student loan bills.
During the first year of the journey, I couldn’t save a single penny. I lived paycheck to paycheck almost all the year. I talked to my father who told me to set aside at least 10% of income, but I failed to do so.
No emergency fund, no life insurance, no car, no house, not even a vacation!
I was frustrated. However, every problem has a solution. In my case, one of my friends played a role of a Messiah and introduced me with the freelance ghostwriting and content writing work.
Yes, I grabbed the opportunity, since I had no other option to earn some extra money to secure my future.
At first, it was quite frantic to meet the freelance target after doing a full time job. But gradually I managed and started working at weekends. Soon, I started earning well, nearly $1250 monthly.
My father told me to open a Roth IRA account to secure retirement age first. As per his opinion, I opened a Roth IRA account and automated $458 to the account every month. I saved the rest of money in a savings account for other purposes.
My current savings
After 24 months of being consistent in saving the amount I planned to, I have nearly $11,000 in my Roth IRA account (As per the Internal Revenue Service limits, being a single, age below 50, the maximum amount I could save in Roth IRA, in 2 years). I have a savings account, a checking account, and medical insurance. I still have some student loan debt to pay off.
I am expecting more growth in my freelance earning and looking forward to buy a new car in the coming Year.
How I achieved the milestone
“You have achieved a milestone”, “You nailed it” Yes! These were the lines of my father after knowing my current financial status. He always wanted to start early savings, but due to poor wages and growing expenses, he couldn’t. Some of his guidelines that play a key role in my achievement are as follows:
Budgeting is the key
My father injected some basic finance knowledge from the very early stage of my life. The first thing that helped me is budgeting. Without budgeting, it wasn’t possible to manage the huge cost of living independently.
I am a conservative spender and love to put all my expenses in a system.
The budget helps me to put the first priority first. I pay to the uncle sam from my gross income, transfer money to the ROTH IRA every month, manage the rent, utility cost, travel cost, and other financial obligations.
Early bird catches the worm
“There’s no perfect age to start saving for the future.” This line was in my mind when I took the opportunity of freelancing and was determined to build up good savings in my 20s. I hope I can save more money at my mid 30s.
Living within the means
I think you don’t need too many things to be happier. You just need to find out the reasons to become happy in life. This mantra helps me to keep faith in myself.
- I love to cook, so I hardly dine out with friends, unless it’s a special occasion.
- I am not a party creature, but I love hanging out with friends and consider free fun activities all around the city.
- I plan a small trip every year with friends and divide the costs among ourselves.
- I am planning to buy a small car to keep the maintenance cost in control, and still considering public transport.
Now, I am supporting my aged parents, donating to the charitable organizations, paying tax, and securing my golden age, while living a happy and financially independent life.
I believe, success came in my early age due to remaining consistent on savings without giving a pause. Also knowing about basic financial principles, taking help of budgeting tools online, automating finances to remain consistent on the plan have played important roles to get the success.