MONEY Spending

When It’s Okay to Splurge on Yourself

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Dave and Les Jacobs/Kolostock—Getty Images

"It's a shame to work so hard all the best years of your life, just so you can afford to survive in the worst years of your life."

When Stan Calow was growing up, frugality was a way of life: “You spend as little as you need to, and then save everything else.” So, the 58-year-old engineer and U.S. Army veteran from Kansas City, Missouri always hated spending money.

It took his financial planner, Cindy Richey, to drill the point into him that it was actually okay to enjoy his savings once in a while.

After much prodding, the message finally got through. Calow and his wife just returned from a trip to France, touring the chateaux of the Loire Valley, just like they had always dreamed.

Says Calow, who learned about the fragility of life by serving in Kosovo: “I wanted to live life while I’m still young enough to enjoy it.”

It’s a tricky dilemma for many of us. As much as pundits tell us to scrimp, and save, and sacrifice for the future, when is it actually okay to spend a little on yourself and enjoy this life that passes all too quickly?

Indeed, according to a new survey, many of us are not enjoying it enough.

When Wells Fargo asked affluent Americans about what they regretted most about their finances, 15% said “not having enjoyed their money more”.

It is an honest answer that you do not often encounter in financial surveys. After all, splurging on yourself is typically seen as selfish and gauche.

But as some planners point out, it’s your money, and you should not be made to feel bad about enjoying it occasionally.

“People are so nervous about outliving their money, and sometimes they shoot too far in their saving,” says Joe Nadreau, director of innovation and strategy for Wells Fargo Advisors. “You don’t want to come to the end with $3 million saved, but having sacrificed your whole life along the way.”

Of course, leaving an inheritance is still an important consideration, according to 57% of affluent Americans in the Wells Fargo survey.

But just remember that once the will is read, you are six feet under, and no longer around to witness your family enjoy that wealth.

A Bank of Memories

So try thinking of the concept of ‘inheritance’ a little differently: Instead of purely in terms of dollar bills, consider it as a set of memories, which you can create together as a family while you are still alive.

“We have recently noticed a sizable uptick in clients who are more interested in sharing their wealth in the form of experiential gifts,” says John Fowler, a planner in Keller, Texas.

“It might mean taking the entire family on a cruise, or paying the airfare to fly in to see grandma and grandpa in Arizona, Colorado, or Florida. At the end of the day our clients realize stuff is just stuff, but with a little effort, they can create a memory for their families that will last a lifetime.”

Keep in mind that splurging on yourself doesn’t mean you become miserly with others. It is not an either/or proposition; You can treat yourself once in a while, and also be generous with charitable causes that are meaningful to you.

“People call me all the time to get permission to enjoy their money, which I heartily give them,” says Dave Ramsey, a popular radio host and author of “The Legacy Journey.”

“Often the thing that breaks it loose for people is to increase their giving. Because the more generous you are, the more you get permission to spend on yourselves.”

As for Kansas City’s Stan Calow, he looks forward to traveling the world with his wife, and enjoying future grandchildren. It was hard to get him to enjoy those savings, but now he’s making up for lost time.

This thought, in particular, came to mind when he was walking the streets of Paris recently:

“It’s a shame to work so hard all the best years of your life, just so you can afford to survive in the worst years of your life.”

Read next: When It’s Okay to Splurge on Yourself

MONEY Saving

4 Quick Phone Calls You Can Make Right Now to Save Money

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Getty Images

Want to lower you bills? Speak up.

With late fees, penalty interest rates and complex credit-scoring algorithms, it often feels like the world of personal finance is designed to be unfavorable to the consumer. As challenging as it may be to keep everything in order, there are plenty of things about your finances you can control, even when it seems like someone else is calling the shots.

If you’re looking for ways to save money, start asking questions. Can you qualify for a credit card with better rewards than the one you have? Would a different cellphone carrier give you the same service for a lower price than what you’re paying now? Researching alternatives is always a good idea if you want to change your expenses, but you may be surprised how much power you have in your existing relationships. Sometimes, all it takes is a phone call to save money.

1. When You Get Hit With a Late Fee

Even the most organized consumers miss a deadline now and then. With many bills, that results in a late fee, but you might be able to get out of it. Often, if you put in the effort to contest a fee (particularly if you have an otherwise great track record of paying things on time), you can get it waived. After paying your bill, call to see if the customer service department will reverse the fee. The worst that can happen is you get turned down and have to pay the fee, but you’ll definitely have to pay if you never ask for an exception. If you’re regularly late with payments, you might want to also shop for a credit card that doesn’t have late fees or forgives late fees for good customers. For example, the winner of the Best Simple Credit Cards in America this year has no late fee.

2. When Your Insurance Premium Seems High

Shopping around for insurance is an important part of managing your finances, because you can often get comparable coverage for varying price points. Before you decide to jump ship on your current provider, call and ask about any discounts for which you may be eligible. The insurer probably wants to keep you as a customer and may be willing to help you save money in order to do so.

3. When Your Monthly Bill Goes Up

Promotional offers are great — until they expire. Internet services commonly provide an introductory rate but increase their prices after you’ve been a customer for a year. Before you decide to suck it up and pay the higher bill (or go through the hassle of changing service providers), call to ask about any deals going on that could add value to your subscription or keep your monthly expenses down.

4. When You Get Charged for Something You Didn’t Buy

Whether it’s a mistake or an instance of fraud, you may sometimes find charges on your credit or debit card statements that don’t reflect a purchase you’ve made. That’s one of the reasons checking your account activity is so important. As soon as you find a transaction you didn’t make, call your financial institution to dispute it. It helps if little time has passed between the transaction’s occurrence and your report.

The same thing goes for errors on your credit report. Inaccurate, negative information could cause you problems when trying to get a loan (or a variety of other things), potentially costing you a lot of money if the errors hurt your credit score. To avoid a problem like that, regularly review your credit history, and immediately dispute any inaccuracies. You can get your free annual credit reports from each of the three credit reporting agencies.

More From Credit.com:

MONEY financial advice

The Painful Secret to Retirement Success

The co-founders of retirement and investment analytics firm BrightScope share the secret of a well-funded retirement.

BrightScope co-founders (and brothers) Mike and Ryan Alfred say saving is the most important thing you can do for your retirement. Start saving early and start saving a lot—way more than the 5% or 6% that workers put in their 401(k) to get an employer match. Ryan, president and chief operating officer, said he knows it can be hard to start saving when you’re young and just started a career, but he thinks you should start saving a little bit and try to increase how much you save each year.

TIME Money

Why ‘Don’t Worry About Money, Just Travel’ Is the Worst Advice of All Time

Chelsea Fagan is a writer and founder of The Financial Diet, a (non-boring) blog about personal finance.

It demonstrates only a profound misunderstanding about what 'worrying' actually means

I have an internet acquaintance that I’ve been following on social media for a little over two years now, an all-around nice, smart girl who blogs and does odd jobs and has recently decided to go back get a Master’s. In Europe. For a degree that, by all reasonable accounts, is probably not going to lead to a great job. And she knows this, I think, because she talks about it as “an opportunity to learn and expand her mind,” more than any sort of preparation for a future career. Which is fine, but the truth of the matter is that she is able to enjoy such freedom — to be a wanderer of sorts who enjoys travel, study for the sake of study, and long conversations over good dinners — because she comes from a good bit of wealth and, if not subsidized entirely, never has to worry about her safety net. She won that particular bit of genetic lottery, and it’s useless to begrudge her the freedom that fate bestowed on her.

But it is useful — important, even — to begrudge her the attitude that comes with it, one that is all too prevalent amongst young people who do not have to worry about the foundations of their future financial security: This idea that you must travel, as some sort of moral imperative, without worrying about something as trivial as “money.” The girl in question posts superficially inspiring quotes on her lush photos, about dropping everything and running away, or quitting that job you hate to start a new life somewhere new, or soaking up the beauty of the world while you are young and untethered enough to do so. It’s aspirational porn, which serves the dual purpose of tantalizing the viewer with a life they cannot have, while making them feel like some sort of failure for not being able to have it.

It’s a way for the upper classes to pat themselves on the back for being able to do something that, quite literally, anyone with money can buy. Traveling for the sake of travel is not an achievement, nor is it guaranteed to make anyone a more cultured, nuanced person. (Some of the most dreadful, entitled tourists are the same people who can afford to visit three new countries each year.) But someone who has had the extreme privilege (yes, privilege) of getting out there and traveling extensively while young is not any better, wiser, or more worthy than the person who has stayed home to work multiple jobs to get the hope of one day landing a job that the traveler will assume is a given. It is entirely a game of money and access, and acting as though “worrying about money” on the part of the person with less is some sort of trivial hangup only adds profound insult to injury.

I was able to travel, and even though I paid for my life abroad with my own work, it was still a result of a healthy amount of privilege. I was from a middle-class family who I did not need to support or help financially, I knew that I could always slink back to their couch if things didn’t work out, and I had managed to accrue a bit of savings while living at home for the few months before I left. There are millions of people who have none of these things, and even if they wanted to pay for travel on their own, would simply not be able to because of the responsibility or poverty they lived with. For even my modest ability to see the world, I am eternally grateful.

And what’s more, I understand (perhaps even better after having traveled a good amount) that nothing about your ability or inability to travel means anything about you as a person. Some people are simply saddled with more responsibilities and commitments, and less disposable income, whether from birth or not. And someone needing to stay at a job they may not love because they have a family to take care of, or college to pay for, or basic financial independence to achieve, does not mean that they don’t have the same desire to learn and grow as someone who travels. They simply do not have the same options, and are learning and growing in their own way, in the context of the life they have. They are learning what it means to work hard, to delay gratification, and to better yourself in slow, small ways. This may not be a backpacking trip around Eastern Europe, but it would be hard to argue that it builds any less character.

Encouraging that person to “not worry about money,” or to “drop everything and follow their dreams,” demonstrates only a profound misunderstanding about what “worrying” actually means. What the condescending traveler means by “not worrying” is “not making it a priority, or giving it too much weight in your life,” because on some level they imagine you are choosing an extra dollar over an all-important Experience. But the “worrying” that is actually going on is the knowledge that you have no choice but to make money your priority, because if you don’t earn it — or decide to spend thousands of it on a trip to Southeast Asia to find yourself — you could easily be out on the streets. Implying that this is in any way a one-or-the-other choice for millions of Americans is as naive as it is degrading.

Everyone needs to forge their own path to financial independence and freedom. And perhaps you are lucky enough that your path involves a lot of wandering around, taking your time, and trying a bunch of new things — because you know that security will be waiting for you at the end of the rainbow. That’s fine, and there is no need to feel guilt or shame over your privilege, if only because it’s unproductive and helps no one. But to encourage people to follow your very rare path, because you feel it is the only way to spiritual enlightenment or meaning, makes you an asshole. It makes you the person who posts vapid “inspirational” quotes that only apply to a tiny percent of the population who already has all the basics covered. And God forbid anyone who needs the money actually does follow that terrible advice, they won’t be like you, traipsing around South America and trying degrees for fun. They will, after their travels are over, be much worse off than when they started. And no souvenir keychain is going to make that reality sting any less.

This piece originally appeared on The Financial Diet.

Read next: 3 Credit Cards That Will Save You Money on Summer Travel

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TIME Ideas hosts the world's leading voices, providing commentary and expertise on the most compelling events in news, society, and culture. We welcome outside contributions. To submit a piece, email ideas@time.com.

MONEY Travel

5 Money-Saving Tips for Road Tripping Families

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Blend Images - Jon Feingersh—Getty Images

There's an art to saving money on the road.

With four kids between the ages of 1 and 12, Loralee Leavitt is a cost-savings ninja when she hits the road.

Leavitt, who hails from Kirkland, Washington, estimates that she has gone on more than 30 road trips with her growing family, logging over 60,000 miles, to places like Utah, Colorado, Arizona and California.

From packing their own food, to staying in state parks, to scouring for last-minute hotel deals, the family has made an art of saving money. Their piece de resistance: A trip to Montana’s Glacier National Park that did not cost more than $400 total.

“It is easy to spend more than you expect,” says Leavitt, author of “Road Tripping”. “But if you prepare it right, it can be a lot of fun, and very cheap.”

More Americans are planning road trips around the United States. In fact, 65 percent of those polled report they are more likely to take a road trip this summer than they were last summer, according to a recent survey by booking site Travelocity. And when you single out parents, a whopping 81 percent said they were more likely to hit the road with the kids this year.

Be careful, though. While a domestic road trip might appear like an affordable alternative to traveling abroad, costs can easily spiral out of control.

A recent study by travel site Expedia found that Americans expect to pay an average of $898 per person for a weeklong trip within their own country, hardly chump change.

To keep a lid on summer road-trip costs, we canvassed financial planners for their best tips, culled from personal experience. Here’s what they had to say.

Use Apps to Your Advantage

Not that long ago, travelers squinted at printed maps and missed exits. These days, there is no excuse for not using smartphone apps.

Google Maps, for instance, will get you from Point A to Point B without getting lost and racking up unnecessary mileage. GasBuddy will locate the cheapest local stations where you can fill up the tank. Apps like RoadNinja and Roadtrippers can tell you about local amenities and help plan your route, and HotelTonight or Hotels.com can locate last-minute lodging discounts nearby.

Get Campy

Ditch the hotels, and stay in campgrounds, says financial planner Therese Nicklas of Braintree, Massachusetts.

By camping in state parks with her family of four for around $10 a night, and cooking their own food, Nicklas estimates they save about $150 every single day.

You don’t have to pitch a tent every night. Consider an occasional splurge at a hotel with a pool, hot showers and free breakfasts.

Diehard money-savers might enjoy so-called “dispersed camping” permitted in many national and state forests, where you set up away from designated campgrounds. No amenities, but no fees, either.

Also consider an annual pass from the National Park Service, allowing you access to more than 2,000 sites nationwide for $80.

Hold Money-Saving Competitions

Adviser Niv Persaud of Atlanta has an innovative idea: Make budgeting a game with your kids instead of a chore. “For each dollar they save, on coupons, special deals, or cheap gas, they earn a star,” Persaud says. “The one with the most stars at the end of the trip gets to pick the location for the next family vacation.”

Forget Flights and Car Rentals

Whatever savings you realize by staying domestic could be wiped out by airline bookings and car- or RV-rental fees. So do what David MacLeod did, and schlep to your destination in your own car, even if it’s a long distance away. The planner from Fullerton, California recently took his family all the way from southern California to Montana in their trusty Honda Odyssey, saving $1,000 in the process.

Bring Your Own Food

The silent killer of many family travel budgets: Eating out. Nip that in the bud with a cooler or two stuffed to the brim with snacks and quick meals.

“A simple gallon of milk, box of cereal, yogurts and fresh fruit can provide a great breakfast at 1/4 of the cost of eating out,” says Janice Cackowski, a planner in Independence, Ohio. She also advises eating out only at lunch, when restaurant prices tend to be much lower.

Above all, don’t be scared off by the idea of being in a car for so many hours with your kids. Magic occurs when families actually spend time with each other. “Something wonderful happens: You pay attention to each other,” says Leavitt.

MONEY Saving

More Than Half of Americans are Delaying Major Life Events Because of This

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iStock

Some say money doesn’t buy happiness, but a lack of money might actually delay it.

A new study shows more than half of Americans have put off major life events like retirement and marriage because of financial worries in the last year. And that number has grown significantly since the recession, according to a poll from the American Institute of Certified Public Accountants (AICPA).

When asked whether they delayed an important life decision because of money woes, 51% of respondents answered yes, up from only 31% in 2007.

A closer look shows the number of Americans putting off certain life events for financial reasons has more than doubled. For example, 24% put off going back to college last year, up from only 11% before the financial downturn, and 18% put off retirement, compared with only 9% in 2007.

Many also put starting a family on the back burner: 12% put off getting married, compared with 6% in 2007; 13% delayed having kids, up from 5%; and 22% put off buying a home, compared with 14% before the housing bust.

The number one financial worry that held people back from these milestones? A lack of savings, cited by 60% of survey respondents.

“If you don’t have adequate savings in place or you’re having trouble paying your bills, it may make sense to hold off on major life decisions until you’re on more solid financial footing,” explained Ernie Almonte, chairman of the AICPA’s National CPA Financial Literacy Commission.

But there are many ways people can make sure financial worries don’t get in the way of life goals, Almonte added. Among them: sticking to a monthly budget to keep you living within your means, starting an emergency fund to help with unexpected costs, and increasing the amount you save from each paycheck.

 

MONEY real estate

This Problem Is Unexpectedly Crushing Many Retirement Dreams

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Peter Goldberg—Getty Images

Housing is most Americans' most important source of retirement security. So a sharp reduction in the rate of ownership, coupled with rising rents, is taking a toll.

The housing bust of 2008 touched every homeowner. The subsequent recovery has been selective, mainly benefiting those with the resources and credit to invest. This has had a more damaging effect on individuals’ retirement security than many might expect.

For a quarter century, home equity has been the largest single source of wealth for all but the richest households nearing retirement age, accounting for 44% of net worth in the 1990s and 35% today, new research shows. The home equity percentage of net worth is greatest among homeowners with the least wealth, reaching 50% for those with median net worth of $42,460, according to a report from The Hamilton Project, a think tank closely affiliated with the Brookings Institution.

By comparison, the share of net worth in retirement accounts is just 33% for all but the wealthiest households, a figure that drops to 21% for low-wealth households. So a housing recovery that leaves out low-income families is especially damaging to the nation’s retirement security as a whole.

There can be little doubt that low-income households largely have missed the housing recovery. Homeownership in the U.S. has been falling for eight years, down to 63.7% in the first quarter from a peak of over 69% in 2004, according to a report from Harvard University’s Joint Center for Housing Studies. Former homeowners are now renters, frozen out of the market by their own poor credit and stricter lending standards.

Meanwhile, rents are rising, taking an additional toll on many Americans’ ability to save for retirement. On average, the number of new rental households has increased by 770,000 annually since 2004, making 2004 to 2014 the strongest 10-year stretch of rental growth since the late 1980s.

The uneven housing recovery is contributing to an expanding wealth gap, the report suggests. Among households near retirement age, those in the top half of the net worth spectrum had more wealth in 2013, adjusted for inflation, than the top half in 1989. Those in the bottom half had less wealth.

Housing is by no means the only concern registered in the report. Much of what researchers point to is fairly well known: Only half of working Americans expect to have enough money to live comfortably in retirement; longevity is putting a strain on retirement resources; half of American seniors will pay out-of-pocket expenses for long-term services and supports; the percentage of dedicated retirement assets in traditional defined-benefit plans has shrunk from two-thirds in 1978 to one third today.

All of this diminishes retirement security. Individuals must adapt, and with so much riding on our personal ability to manage our own financial affairs it is surprising that the report goes to some lengths to play down the importance of what has blossomed into a broad financial education effort in the U.S.

Financial acumen is generally lacking among Americans and, for that matter, most of the world. Just half of pre-retirees, and far fewer younger folks, can correctly answer three basic questions about inflation, compound growth, and diversification, according one often-cited study. Yet researchers at The Hamilton Project assert that it is an “open question” as to whether public resources should be spent on educational efforts, citing evidence of its effectiveness as “underwhelming.”

I have argued that we cannot afford not to spend money on this effort. Yet I also understand the benefits of promoting things like automatic enrollment into 401(k) plans and automatic escalation of contributions, which The Hamilton Project seems to prefer. The truth is we need to do all of it, and more.

MONEY

How to Be in Your Friend’s Wedding and Not Go Broke

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Alamy

Being in a bridal party isn't all fun and games, especially when the tab comes due.

Being in a wedding may be an honor, but it’s expensive. Like, really expensive. Like, “I have to spend hundreds of dollars on clothes and travel then buy you a present to thank you for the opportunity” expensive. According the the most recent American Express Spending and Savings Tracker, the cost of being in a bridal party is now $701, up 13% from 2014.

But an honor is supposed to be priceless — or at least not send you to the poor house. Here are some ways to trim the bridal party sticker shock:

The Attire

Navigating sartorial demands is tricky because you’re limited to the wishes of the bride and groom.

Fellas, there’s not much you can do to reduce the cost of a tuxedo, but some tux shops do offer discounts when everyone rents from the same place. Unless you plan to wear it four or more times in the next few years, you’ll want to rent instead of buy.

Ladies have a little more wiggle room here. Once the bride has settled on a color and style (a process during which you can advocate for the lets-get-different-dresses-that-express-our-personality-and-are-consequently-cheaper approach) you can start scouring the recesses of the internet to find “gently used” dresses. Tradesy has a bridesmaid section, but steadfast options like Ebay can also help you find discounted dresses. Also, a local tailor may be cheaper than a bridal salon for alterations, so shop around before settling on a seamstress. And remember, you’re probably only going to wear the dress once — no need to splurge for a perfect fit, just enough tailoring to help you feel confident.

The Gift(s)

The American Express study also found that the average cost of a wedding gift is $106, plus an additional $77 for the shower gift, $86 for the bachelor/bachelorette party, and $89 for the engagement party.

One way to avoid racking up the gift expenses is by offering to contribute to the wedding in a creative way. Good at graphic design? Ask if they need help designing the invitations. A photographer on the side? Offer to take the engagement photos. When your friend tries to compensate you for your work, tell them it’s your present to them for their special day. Not only will your skills make a touching gift, they will also save the bride and groom money in the long run.

If your creative skills aren’t up to par, you still have options. First, try getting to the registry ASAP, before the cheap options (trivets! wooden spoons!) get scooped up. Pairing them with other low-cost items can help you create a themed gift (i.e. measuring cups + mixing bowel + cookie cutters = starter set for bakers) without selling your soul to pay for the professional stand mixer. If the registry still isn’t an option, you can buy off the list – just make sure you keep the couple’s style and preferences in mind, and always include a gift receipt.

The Logistics

Buddy up. With hotel rooms averaging $141 nationwide, split the cost with a fellow member of the bridal party. And though it’s hard to strategize when to get the cheapest flights, studies suggest booking 50 to 100 days before the event to get the best deal.

The Parties

Again, booking early can help transportation costs, but also consider Airbnb for cheaper lodging. For wild nights, consider locations that offer a high concentration of bars and restaurants so you can walk from place to place instead of relying on cabs or renting a limousine. You can also double down on the weekend by hosting both the bachelorette and bridal shower at the same time. It cuts travel costs in half, and one trip means less time off of work.

Bridesmaids are also often tasked with throwing the bridal shower, and food, decorations, alcohol and favors add up fast. One way to curb the cost is to host the event in someone’s home instead of renting out a room in a restaurant. You’ll avoid rental fees and have more flexibility with food and alcohol. It’s also a chance to flex your Pinterest muscles and adopt a DIY approach. Unless you want the shower to be a complete surprise, run generic ideas past the bride. If she’d rather not have the shower at someone’s home, consider parks (have a backup plan for weather), fraternal organizations or community spaces in condo or apartment complexes as well as her favorite restaurants.

And even though the financial tab for the shower often falls on the ladies, you groomsman may not be in the clear for long. Jack and Jill wedding showers are on the rise.

The Alt Option

Remember, if money is tight, being honest with your friend from the very beginning can help avoid a lot of headaches in the future. You can say no to the opportunity, and hopefully your friendship is strong enough that the bride or groom will understand. Start by acknowledging how honored you are to be offered a part in their day, but explain that financial constraints might keep you from performing your duties. You can finish the conversation by offering to help in other ways, like hosting the bridal shower or helping with last minute crafts and decorations. Besides being open with them, you also want to have the conversation as soon as possible to avoid causing last minute stress for the happy couple.

Read next: 8 Cost-Cutting Wedding Hacks

MONEY 401(k)s

The Painless Way New Grads Can Reach Financial Security

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Steve Debenport—Getty Images

You don’t need to be sophisticated. You don’t need to pick stocks. You don’t need to understand diversification or the economy. You just need to do this one simple thing—now.

A newly minted class of college graduates enters the work world this summer in what remains a tough environment for young job seekers. Half of last year’s graduates remain underemployed, according to an Accenture report. Yet hiring is up this year, and as young people land their first real job they might keep in mind a critical advantage they possess: time, which they have more of than virtually everyone else and can use to build financial security.

Saving early is a powerful force. But it loses impact with each year that passes without getting started. You don’t need to be sophisticated. You don’t need to pick stocks. You don’t need to understand diversification or the economy. You just need to begin putting away 10% of everything you make, right away. And 15% would be even better.

Consider a worker who saves $5,000 a year from age 25 to 65 and earns 7% a year. Not allowing for expenses and taxes, this person would have $1.1 million at age 65. Compare that to a worker who starts saving at the same pace at age 35. This worker would amass half that total, just $511,000. And now for the clincher: If the worker that started at age 25 suddenly stopped saving at age 35, but left her savings alone to grow through age 65, she would enjoy a nest egg of $589,000—more than the procrastinator who started at age 35 and saved for 30 more years.

That is the power of compounding, and it is the most important thing about money that a young worker must understand. Those first 10 years of a career fly by quickly and soon you will have lost the precious early years of saving opportunity and squandered your advantage. That’s why, if possible, I advise parents to get their children started even before college.

Once you start working, your employer will almost certainly offer a 401(k) plan. More than 80% of full-time workers have access to one. This is the easiest and most effective way to get started saving immediately. Here are some thoughts on how to proceed:

  • Enroll ASAP Some companies will allow you to enroll on your first day while others require you to be employed for six months or a year. Find out and get started as soon as possible. Most people barely feel the payroll deductions; they quickly get used to making ends meet on what is left.
  • Have you been auto enrolled? Increasingly, employers automatically sign you up for a 401(k) as soon as you are eligible. Some also automatically increase your contributions each year. Do not opt out of these programs. But look at how much of your pay is being deferred and where it is invested. Many plans defer just 3% and put it in a super safe, low-yielding money market fund. You likely are eligible to save much more than that and want to be invested in a fund that holds stocks for long-term growth.
  • Make the most of your match A big advantage of saving in a 401(k) is the company match. Many plans will match your contributions dollar for dollar or 50 cents on the dollar up to 6% of your salary. This is free money. Make sure you are contributing enough to get the full match.
  • Keep it simple Choosing investment options are where a lot of young workers get hung up. But it’s really simple. Forget the noise around large-cap and small-cap stocks, international diversification, and asset allocation. Most plans today offer a target-date fund that is the only investment you’ll ever need in your 401(k) plan. Choose the fund dated the year you will turn 65 or 70. The fund manager will handle everything else, keeping you appropriately invested for your age for the next 40 years. In many plans, such a target-date fund is the default option if you have been automatically enrolled.
  • Take advantage of a Roth Some plans offer a Roth 401(k) in addition to a regular 401(k). Divide your contributions between both. They are treated differently for tax purposes and having both will give you added flexibility in retirement. With a Roth, you make after-tax contributions but pay no tax upon withdrawal. With a regular 401(k), you make pre-tax contributions but pay tax when you take money out. The Roth is most effective if your taxes go up in retirement; the regular 401(k), if your taxes go down. Since it’s hard to know in advance, the smart move is to split your savings between the two.
  • Get help An increasing number of 401(k) plans include unbiased, professional third-party advice. This may be via online tools, printed material, group seminars, or one-on-one sessions. These resources can give you the confidence to make decisions, and according to Charles Schwab young workers that seek guidance tend to have higher savings rates and better ability to stay invested for the long haul in tough times.

Read next: 6 Financial Musts for New College Grads

 

 

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