It's great to take advantage of life, especially in your 20's when you might not have as many responsibilities. However, now is the best time to actually start setting aside some money. Being able to set aside even a small amount makes it a habit that you get used to after awhile. And before you know it, it is a super easy habit and a small fortune is yours.
It's sometimes hard to save for those unexpected or once a year expenses, but retirement? That's something that's way far off that really has no tangibility to it. Saving for something that you really have no understanding about how it will be when you get there is even harder.
But those 20 dollars you spent on a movie and maybe dessert afterwards can go towards a retirement account that you contribute to on a weekly basis. It's only 20 dollars! Not an arm and a leg. And the best part about saving in your 20's is that you have the power of time and compound interest. The money has time to grow above and beyond these small amounts into something that can help you survive for a year or two once in your 60's.
What's worse is when I hear of my friends who have had jobs since they graduated (lucky...) and still have not set up their 401k! What is this?! Throwing free money out the window is right!
So what are a few steps that you can take today?!
- Sign up for your employer's 401k. If you are confused, there is always HR or find out who in your company is responsible for this area.
- Open a Roth IRA, especially if your employer does not have a retirement vehicle. There are many places where you can open the IRA, make sure that it suits you and especially make sure the fees aren't exorbitant!
- Set aside a small amount to be taken out automatically with each paycheck. Start at something that is reasonable for YOU! Not something that other people have told you or say is law. If $50 is a great start every other paycheck, go ahead. You can always increase it or decrease it but make sure it's consistent.
- Set it and forget it! The best part is that once it's going, and everything is invested wisely, you'll find that your money will work for you!
Your 20's should be about enjoying life, but don't forget about how you will enjoy those later years too!
Your future self will thank you immensely.