If you’re turning the big 3-0 this year, give yourself a pat on the back.
Odds are you’ve finished a degree or two, your career is finally getting jump-started, and you’ve graduated from boxed Franzia to a much classier bottle of Malbec.
But even though you’re all grown up, you might still feel like a freshman when it comes to your money. And that’s OK—except for the fact that this is one very important decade when it comes to reaching your financial goals.
Those goals needn’t be exotic: But most of us are saving up to buy a house, get married, take our next big vacation or float our retirement, and all of those mean having a handle on your spending … and saving.
We know: “But retirement is so far away—I’ll have plenty of time for that later,” you say. Not so fast. You might not even realize you’re telling yourself lies just like this one every day so you can deal with all the “big” money stuff later.
But not after today: LearnVest Planning Services’ Natalie Taylor, CFP®, weighed in on the top 10 money myths that younger people tend to believe—and why it’s critical to debunk them before you blow out that fateful set of candles.
1. “Retirement is an old person’s problem.”
Sure, figuring out what to wear on your next job interview sure feels more pressing than money you won’t be able to touch for another 30 to 40 years. But consider this: If you start saving $2,000 a year for retirement starting at age 25, by age 65 you’ll have roughly $520,000 (assuming your money grows 8% each year). If you wait until age 35 to begin, you’ll end up with only $226,000. Since a 30-year-old making $50,000 may need to save up to $2 million for his golden years, Taylor says, time really is money when it comes to retirement savings, so don’t wait another minute to open your account.
If you work at an employer that offers a 401(k) or 403(b) match, you should contribute at least the minimum you need to qualify for it—otherwise you’re turning down free money, Taylor says. If you work for yourself, start an IRA. The overarching goal “is to contribute at least 10% of your income. If you can’t contribute 10%, put in whatever you can afford. Then increase your contribution by 1% every six months,” she suggests.
2. “I should be running the company by now.”
When you hear that 31-year-old Mark Zuckerberg touts a net worth of more than $48 billion, you might die a little inside taking a look at your comparatively paltry assets. But it’s important to remember that start-up superstars like the Facebook founder aren’t the norm—most people rise through the ranks (and earn the big bucks) slowly.
“First, use a tool like Glassdoor.com to figure out what you’re worth, so your expectations are reasonable. Then show your boss that you’re ambitious, not entitled,” Taylor says. She suggests you can do this by setting up a meeting and asking your boss how you can improve the company. Then follow up six months later with evidence of how you’ve implemented the changes. If she is pleased, you’re probably in a good position to ask for a raise. Just keep in mind that you want to come across as confident, not arrogant, Taylor warns.