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How to Beat the Barriers to Saving
Many millennials struggle with the importance of saving for the future when there’s so much going on in their day-to-day lives. Chances are you’re not worried about retirement; you’re worried about making rent, eating food that isn’t ramen, or keeping your car running.
The importance of having enough money to retire on is diminished because it’s decades away. You can worry about that when you’re in your 40s, right?
Wrong. I know it might sound hard to believe, but you should be concerned about retirement in your 20s. Social Security isn’t guaranteed to be around, and if you don’t have a 401(k), then it’s up to you to open a retirement savings account and contribute to it. No one is going to do it for you.
Saving for retirement now versus waiting 20 years can mean the difference of being able to afford to retire. Do you want to be working at 75 because you need the money? If not, then you need to figure out how to overcome this challenge.
Are You Living in the Present, or the Future?
A lot of people think living paycheck to paycheck and being in debt is normal. Student loan debt perpetuates this. College is expensive; most of us need to take out loans to attend.
Then we have trouble finding jobs. Paying back our loans becomes a challenge. We resign ourselves to paying back debt for the next 10 years (or more, if you’re on an Income-Based Repayment plan) because we have things to enjoy in the meantime.
Who wants to say “no” to hanging out with friends because they’re trying to save money for an emergency fund or for retirement? Besides, you can always put it on your credit card and worry about it later. YOLO, right?
It’s extremely easy to fall into the trap of only living for today and not thinking about your future. In reality, you’re borrowing money from your future self by spending it now. That’s short-term thinking, and it has the potential to get you into trouble when it comes to debt and making any sort of financial progress.
There’s a Way to Find Balance
I’m not saying you should become a hermit and live off peanuts. I’m saying you should push past the “broke college student” mentality that seems to plague most people in their 20s. There’s a way to have fun living in the present while being financially responsible for the future.
First, you need to focus on earning more. If you’re unemployed, anything helps. You never know what opportunities could arise from taking a job you think is beneath you. You can also create your own job by freelancing or monetizing a hobby that has potential.
Second, you need to get serious about optimizing your money. Forget keeping up with your friends – let them spend their money how they wish, but stay true to your values and you’ll find opportunities to save.
Third, automate your savings. Figure out how much you’re earning, what your expenses are (include your debt), and note how much is left. Transfer that leftover money to your savings account before you have a chance to spend it. If you’re lucky enough to have a 401(k) with matching contributions, then contribute enough to get that match. It’s free money!
Fourth, avoid consumer debt. Stay away from credit cards if you can’t trust yourself to use them responsibly (a.k.a., pay your balance in full every month). Debt only moves you further away from a secure financial future.
Remember That Anything Helps
Developing the habit of saving money is more important than the amount you save when you’re starting out. Does saving $5 every week sound silly to the point where you’d rather spend it?
That mentality won’t get you anywhere. Start by saving anything you can. Go through your budget. I’m sure you can find $5 or $10 somewhere, even if it means taking that money out of another category. Your future self will thank you.
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