Does it REALLY matter if you spend all your money on strippers, white claws, and bottomless mimosas? You’re 25, building your career, have extra money for the first time ever, after being broke in college, and want to have some fun. Is there anything wrong with that? NO.
You can have fun, you can drink your redbill vodka, but you also should save and here is why. If you invest $500 per month, from age 22 to age 65 and you get a 10% return on your money, which is very reasonable. You will retire with nearly 4.3 Million dollars. If you wait just 8 years and start at age 30, with the same amount of money $500 per month at 10% return. You will have 1.9 Million dollars. That’s less than half. If you once again wait until age 35 that brings you down to 1.1 Million. If you are over the age of 35, and it seems hopeless, it’s NOT. The main difference is that you are going to have to save more than $500 per month if you plan to reach the Million-dollar mark. For another example, if you are 50 years old, to reach 1 Million dollars at a 10% return you would need to save about $2450 dollars per month. That’s a bit more difficult than saving $500 while you are 35, and you would still have less money.
I hope you can see the trend. Waiting to invest, after your 20s can drastically change your retirement. You could be in retirement, traveling to nice resorts whenever you want, eating at the finest restaurants in the world and bringing your family with you. That’s with 4 Million dollars. Bring it down to 1 Million and now you could be worrying about having enough money for the rest of your life, a million dollars is a lot of money, but it’s it can still easily be spent. 1 Million dollars is not enough to live wild; you can take a trip here and there and that might be good for you and that may be enough to make you happy. Wouldn’t it be better to have a much larger cushion of money and being able to leave your family a massive sum of capital when you pass away, as well as being able to indulge in all the things you’ve always wanted to try?
$500 can be a lot of money for someone in their 20s. Many people have student loans, they have car payments, they have rent or a mortgage. If you are dedicated to saving the money you will do your best to figure it out. I don’t think you should become a hermit and not do anything fun just to save money, that’s not worth it. But drinking before you go to bars, so you don’t spend $10 per drink. Having roommates so your rent is less expensive and buying a used car are all things that can help you to save that $500 per month. To be honest, even saving $250 a month or $100 a month is still very good. You just need to save SOMETHING, and you need to do it EVERY SINGLE MONTH. If you only save here or there, and one day decide to spend some of your savings you will never work your way to saving a lot of money. Plan life so you don’t need to hope for a winning lottery ticket.
It’s also very important to understand that this is money that is INVESTED. There are many investments that can yield 10% per year but they each require their own research and understanding. I have an article about the Roth IRA which is in my opinion the simplest way to invest, and it will allow you to have your 4 Million dollars tax free. Less taxes means more money in your pocket.
If you want to retire before your 60s you will probably need to save more than $500 per month, and you will need to do additional investments other than an IRA. IRA’s currently max out at $6000 for people younger than 50, $7000 for over 50. $6000 per year is $500 per month. This includes things like individual stocks, mutual funds, index funds, 401ks, or crypto currency. I personally like to have some money in each of these things, so that I can be as diverse as possible in my investments to help reduce the risk and hopefully get large returns. Buying a home can also be a good way to have some money building up because you would be slowly paying off your home each month. Once that home is paid off you can rent it out, or use it as an Airbnb, to bring in extra income, or at least you won’t have a payment and can save the extra money.
When it comes to investing the best time to start is NOW. If you start to save when you’re getting close to retirement that is probably too late. If you start in your 20s it allows you the time to save, invest, and let your money grow without you having to work extra hard to save more money. Saving young will allow you to spend even more money throughout your 30’s, 40’s, 50’s and through retirement because the money saved in your 20’s will compound so much that you will not have to worry about it in your later years.
SAVE SOME DANG MONEY!
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🔎Disclaimer🔎 All content in this blog is for entertainment purposes only. I am not a professional financial advisor and my statements are not to be taken as instructions or directions. In no event will I be liable for any losses or damages arising from the use of content from any of my platforms, including, but not limited to YouTube, Blog, or any other social media. I reserve the right to change my opinions and entertainment content at any time. Please be sure to do your own due diligence!