Our generation (Millennial) gets a bad rap for a lot of things. But, one thing we generally do well is save our money. We’ve learned from the baby boomers what not saving can do, and it has been engrained into our brains that saving is the way to go. That being said, we are still huge spenders. We tend to spend more on travel and experiences than material items. But spend we do.
I am a big advocator in the saying:
Prepare for tomorrow, live for today.
The end goal is to live comfortably in retirement, or for some, to retire early. All while still having fun experiences now. So we must budget by saving money. The general rule of thumb for saving is:
33% Living (rent, mortgage)
33% Spending (groceries, shopping, car payment)
33% Savings (retirement, emergency fund)
If you can do this, you’re on your way. Another measurement to see if you’re on track is they say to have double your current salary in retirement savings by 30. Woa.
That’s a lot, especially considering most Americans aren’t on track to meet this goal.
So, what can I do?
You want to save as early as possible. The power of investing is all due to time. So save as much as you can while you’re young and keep it up. Also, make sure your investments are diversified. It has been proven that proper diversification of funds leads to maximum return on investment. Thankfully, its been made easy with target date funds. You input your target date to retire and the fund re-allocates itself annually to diversity in your best interest. AKA: as you get older, it becomes more conservative since you have less time to recover from a market dip.