{"id":413,"date":"2016-01-27T09:18:23","date_gmt":"2016-01-27T14:18:23","guid":{"rendered":"http:\/\/www.investmentzen.com\/blog\/?p=413"},"modified":"2017-06-13T12:26:57","modified_gmt":"2017-06-13T16:26:57","slug":"if-youre-not-saving-in-your-20s-youll-regret-it-in-your-30s","status":"publish","type":"post","link":"https:\/\/www.investmentzen.com\/blog\/if-youre-not-saving-in-your-20s-youll-regret-it-in-your-30s","title":{"rendered":"If You’re Not Saving In Your 20s, You’ll Regret It In Your 30s"},"content":{"rendered":"

T<\/span>he prevailing wisdom among millennials says they should \u201clive it up\u201d while they\u2019re young. Ignore the mounting bills, the student loans, and the 401(k), they say, because there are parties and boozy brunches to attend.<\/strong><\/p>\n

Lauren Martin, a twenty-something writer for Elite Daily, highlighted this thought process last year in her essay, \u201cIf You Have Savings in Your 20’s, You\u2019re Doing Something Wrong<\/a>.\u201d<\/p>\n

\u201cI don\u2019t have any savings, but I also don\u2019t have any wants,\u201d said Martin, before rolling out her list of priorities. In case you\u2019re wondering, that list includes things like dinners out, clothes she doesn\u2019t need, and memorable nights with her friends at expensive clubs.<\/p>\n

\u201cI don\u2019t know about you, but I like to enjoy my life,\u201d she says.<\/p>\n

Worse, any investing advice she may have gotten must have fallen on deaf ears. How do I know? Because Martin\u2019s take on retirement can be summed up like this:<\/p>\n

\u201cWhen you care about your 401k, your life is just \u201ck.\u201d<\/p>\n

Let\u2019s Look at the Broader Picture, K?<\/h2>\n

This would all be oh-so-adorable if Martin\u2019s money manifesto didn\u2019t come with real-world consequences<\/a>. Fact: The average twenty-something has just $16,000<\/strong> saved for retirement. Fact: The average thirty-something has just $45,000<\/strong> stashed away. Another fact: The average person in their 40’s<\/strong> has only around $63,000<\/strong> tucked away to retire.<\/p>\n

In truth, the Federal Reserve\u2019s numbers show that the median savings for households with members ages 55-64<\/strong> is paltry \u2013 ringing in at just $104,000<\/strong>. Anyone with a clue already knows this isn\u2019t even close to the amount of money one normally needs to retire \u2013 and especially to retire comfortably.<\/p>\n

More importantly, it proves the idea that \u201cwe\u2019ll just start saving when we\u2019re older\u201d is just that \u2013 an idea. It\u2019s wishful thinking at its worst, and downright dangerous at best.<\/p>\n

But Martin and her friends are likely too busy \u201cliving it up\u201d to see the writing on the wall. And by the time they do, it will be far too late \u2013 their twenties wasted, and a decade of potential gone forever.<\/p>\n

Whether You Save or Not, Time Goes On<\/h2>\n

If there was such a thing as a time machine, it would be fun to see how Martin\u2019s genius plans panned out. Sadly though, we don\u2019t need to time warp to see what happens when people don\u2019t save in their 20’s. If you look close enough, thirty-something Laura Martins are everywhere. And they\u2019re easy to spot because they won\u2019t shut up about how hard it is to get ahead.<\/p>\n

They paid the minimum payment on their student loans all through their 20’s, so they\u2019ve still got a decade or more to go. Their 401(k) balances are nearing zero, so they don\u2019t even try. And the fact that they never had an emergency fund or any type of savings means they\u2019re usually in debt \u2013 mostly for things they didn\u2019t need to begin with.<\/p>\n

But the world is hard, and it\u2019s all unfair.<\/p>\n

While I break out the world\u2019s smallest violin, consider this: Martin and her minions may be making their beds, but you don\u2019t have to join them. In reality, you can have the best of both worlds.<\/p>\n

You can save for the future while also having a whole lot of fun today. You can\u2019t afford everything you want, but with the right attitude and money mindset, you can certainly afford some of it.<\/p>\n

Real adults have been balancing pleasure with responsibility for a long time, and they continue to do so. It\u2019s not all or nothing. It\u2019s not either \u2013or. And in reality, it has never been.<\/p>\n

Millenials Should Play Hard, but Save Harder<\/h2>\n

Many of us thirty-somethings know this lesson far too well. We whooped it up in our 20’s only for reality to smack us in the face somewhere down the line.<\/p>\n

Chris Peach, financial coach and blogger from MoneyPeach.com<\/a>, built his entire business around the fact that he once lived outside his means.<\/p>\n

He and his wife overspent while they were young only to make up for it later \u2013 and then some \u2013 once the house, the kids, and the doldrums of adulthood took hold. After living paycheck-to-paycheck for the first three years of marriage, Chris and his wife got serious and paid off $52,000<\/strong> in seven months.<\/p>\n

But in hindsight, Chris said it would have been easier to avoid that mess altogether. You know the saying, \u201can ounce of prevention is worth a pound of cure.\u201d<\/p>\n

Your 20’s are the worst time to ignore your finances, says Chris, because this is where you reach a fork in the road. You\u2019re either ready to graduate college or enduring your first job. Either way, you will soon be making a steady salary \u2013 and it\u2019s up to you to decide what to do with it. And it\u2019s much better to get into a routine before a spouse, 2.5 kids, and a house with a picket fence are in the picture.<\/p>\n

The Benefits of Saving in Your 20s<\/h2>\n

Being in your 20’s offers the distinct advantage of having extra time to spare, but that\u2019s not all. Here are some of the many advantages that come with getting your financial house in order the moment you get a job:<\/p>\n

Benefit #1: The Magic of Compound Interest<\/h3>\n

If you don\u2019t save in your 20’s, you\u2019re missing out on what Albert Einstein once called the \u201ceighth wonder of the world\u201d \u2013 compound interest.<\/p>\n

Due to the amazing power of compound interest, someone who saves $100 in their 20’s and stops on their 30th birthday will have more money than someone who starts saving on their 30th birthday all the way to their 60th<\/sup>, says financial expert Jim Wang of Wallet Hacks<\/a>. (By the way, this assumes a 7 percent return and it\u2019s absolutely true)<\/p>\n

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