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.
My parents always talked about saving, even when it's hard, so I grew up thinking it was not even an option. Even whe I was in grad school and living on less than 15,000 a year, I saved. I would save 10bucks a week, but to have something in savings when I needed it.
ReplyDeleteMost people don't want to save money, and being able to force yourself at a young age makes it so much easier when you are older. Ah, those parents, they knew what they were talking about.
DeleteHoly crap! Young people not saving drives me nuts! My 26 year-old sister just graduated from college and I try to advise her. Here is how a conversation went earlier this year:
ReplyDeleteMe: Now it the most important time in your life to save. You are young and the money has the most time to build. Save a little now and you'll be completely set down the road.
Her: I'm not sure I can afford to, my apartment will be expensive and I may get a new car.
Me: Why don't you get a roommate or rent a room from someone of live with us for a while?
Her: I need my space. I don't want a roommate. Also, I want the hatchback version of my car.
Me: AHHHHHHHHHHHHHHHHHHHHHHH!!!!!!!!!!!!!!!!
It drives me nuts because if you're in your 20s, all you really need to do is save hardcore for 5 years or so. It's also the best time to do it; no kids, you're used to living on less from college, etc.
Exactly!!! Those are the exact conversations!!! I've also come to realize that there are so many temptations now in days and advertisers have made so many things needs now in days instead of wants. That new car, I promise you, is not a need...
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