Should You Save in Your 20s At All?

Did you see thisrecent article in Elite Daily, If You Have Savings in Your 20s, You’re DoingSomething Wrong? The Interwebs hasgone crazy refuting this wrong-headed advice. While I agree with most of therebuttals I’ve read on the subject, I did have a few additional thoughts.

For one thing, I thinkthe author deserves a break. She’s trying to articulate a mindset about moneythat’s hopefully freeing. She wants to think about money as an enabler of lifeexperiences, not something that constantly ties you up in stressful knots.She’s also giving voice to a complaint many millennials stay silent about: whenyou’re paying down crushing student debt and fighting for your first well-paidjob on the heels of an extraordinary recession, money can be a real millstonearound your neck. Under those circumstances, it does feel impossible to save“extra” – what “extra” is there? Millennials have been famously over-conservative about money and investing for quite a while –for good reasons. Not only are they challenged with their own finances, they’veseen their Boomer parents struggle to retire – or defer retirement entirely.It’s not an encouraging picture.

But: times havefinally changed, and greatly for the better. Millennials are finally landingbetter-paid jobs in their fields, moving out of Mom and Dad’s, and striking outon their own. Those student loans may still be daunting, but a few years intopaying them down at least habituates you to the monthly bill (and makes a gooddent in the overall amount). I’ve said it before, and I’ll say it again:millennials have developed extraordinary financial discipline from sheernecessity. If they stick to those habits, they can reach any long-termfinancial goal. But the survivalist habits that got millennials through theGreat Recession will need to be modified in this more prosperous time. A bunkermentality about money is, if punitive, at least simple to understand. What’smore difficult – but also necessary – is striking the right long-term balancebetween occasional indulgences now and consistently saving for the future.

Investing is amarathon, not a sprint. You have to pace yourself: establish those good habitsearly and stay consistent, but also allow yourself to taste your successes andsplurge now and then. Life is meant to be enjoyed, too. Part of thesatisfaction that financial planning can bring is knowing that you’re takingcare of yourself and your loved ones for years to come. It feels awesome tohave confidence in your financial future, doesn’t it? Just as it feels awesometo toss a little mad-money at some fun now and then.


Don Montanaro

CEO, TradeKing Group

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