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It's no secret that there's a lot of really bad "advice" on the internet. If you dive into the deepest corners of the web, you can find some truly deplorable stuff. But I think I just found something that takes the cake.
I will not link to it here; if you
It only gets worse from there. While the author (who has not yet responded to a request to comment for this story) is presumably trying to get twenty-somethings to relax about their financial states and just enjoy life, the end result is something akin to financial malpractice. "People who are saving in their 20s are people who don’t set their sights high. They’ve already dropped out of the game and settled for the minor leagues," she writes. "Your 20s are not the time to save; they’re the time to gamble. $200 a month isn’t going to make the dent that a $60,000 pay raise will after spending all those nights out networking."
Other quips include: "Don’t waste your youth worrying about expenses when you should be worrying about experiences" and "when you care about your 401k, your life is just 'k.'"
There's a lot to address here, but let's start at the top. If you have savings in your twenties -- any savings at all -- you are not doing something wrong. In fact, you are doing something very, very right.
If you're saving anything at all, you're ahead of a large portion of your generation. A recent Consumer Federation of America survey found that just 56% of adults ages 18 to 34 are saving at least 5% of their income; other surveys have shown that as little as 17% of Millennials feel they're on track to save what they'll need in retirement. And heck, forget retirement (for now): if you have even the tiniest bit of savings, you're doing better than nearly a third of the country -- this study found that 29% of Americans have no emergency savings at all.
But if you are a part of that 29%, don't beat yourself up. Between rent, utilities, debt payments and general cost-of-living expenses, it can be hard to find extra money to save at the end of each month. (A new study from the Investor Protection Institute found that 34% of Millennials have seen their savings ability impacted by their student loans.) The key is to cut yourself a break and start small.
"For most people, if they haven't been able to save anything, a dollar is better than zero, " says Chantel Bonneau, a certified financial planner at
Most people will make a major mistake before their 30s. Use this guide and don’t be one of them.
While it's beautiful and lovely to imagine a future in which nothing goes wrong -- the car never breaks down, your health remains pristine and your dog never inhales a three-pound bag of chocolate -- the cruel fact of life is that stuff happens. And if you have an emergency cushion to fall back on, recovering from the financial impact of these emergencies will be far easier than if you charge the $1,000 bill for your new transmission to your 19%-APR credit card. Planning for these emergencies and building your savings doesn't mean you're not "setting your sights high"; it means that you're avoiding hundreds upon hundreds of dollars in interest charges. (Literally: that $1,000 charged to the 19%-APR credit card would take 115 months to pay off -- if you're only making the minimum $25 per-month payment -- and would cost $989.65 in interest, nearly the full amount of what you charged to the card in the first place.)
As for the claim that $200 saved per month is a drop in the bucket that is a $60,000 pay raise: well, sure, $200 is less than $60,000. But this conveniently overlooks two things. For one, wages are (and have been) flat. The monthly jobs reports have shown as much, and a survey from the Census Bureau released Wednesday revealed that "real median incomes in 2014 for family households ($68,426) and nonfamily households ($32,047) did not experience statistically significant changes from the levels in 2013."
For another, this blatantly ignores the fact that if you save $200 every month, the money adds up. After a year, you'd have $2,400. After two years, $4,800. And if you were putting these $200 monthly deposits into a portfolio that is then invested in the market and earning a 6% return, you'd have $14,000 in just five years. After 30 years, that figure will have ballooned to more than $200,000. This -- the magic of compound interest -- is why starting to save in your twenties is so critical: the more time your money has to grow, the more you will earn. As this post explains, if you wait until your mid-thirties to start saving, you will be at a $100,000 disadvantage.
Ultimately, the EliteDaily post attempts to impart a Ferris Bueller-ish lesson: "Life moves pretty fast. If you don't stop and look around, you might miss it." But what the author either doesn't know or willfully ignores is the fact that budgets don't have to mean deprivation and savings aren't handcuffs. You don't have to surrender every fun thing in your life in order to build a cash cushion; you just have make a few strategic choices so that your monthly spend is less than your monthly take.
Making some of those strategic choices now can mean financial freedom later on, too. And don't just take it from me. Take it from this couple, who saved 71% of their income so they can retire at the age of 33. Or these roommates, who drastically cut their spending for one year and are now $55,000 richer. Or this couple, who saved $40,000 in two years and are now traveling around the world. So maybe you should spend your youth worrying about expenses -- so that you don't have to worry about experiences later on.
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