The Quickstart Savings Guide
Martin Sanchez Via Unsplash
Here you’ll find the simplest information about saving and investing tools that you can set up in literally 5 minutes, and hopefully, I’ll answer a few questions along the way regarding account types, IRAs, blah blah blah. The younger you can start these things the better, but it’s also never too late — so get on it!
Start small and find your balance
I say “start with $10.” I’m expecting you to tinker with this and find the right balance for yourself. If you can afford more, do more. Where ever you are in life at this moment, it’s ok. You’re not alone. I’ve had $10 times, $500 times, and all sorts in-between. Just start somewhere for you and your future. If you can afford more, do more.
First thing’s first, you need cash. I’m assuming by this point you have a job or some way to make money. Good, we’re making progress. If you grew up in a cave, bubble, maybe a ship at sea (I don’t know your life) you’ve possibly missed this step…
Immediately save a percentage of every paycheck
Or, “pay yourself first” as you see on the Instagram posts, but this can be oddly difficult when you’re young. You’re so excited to get that first “big” check from a new job. You look at it, and it wasn’t nearly what you expected. Taxes just laughed in your face and smacked the $5 iced coffee out of your hand. Plus, insurance — that’s a thing. Hopefully, your company pays at least part of that, but maybe not. Maybe they don’t provide it at all (bastards).
Saving on top of all that can feel impossible. Using these following tools can make it slightly less painful to put those few dollars away automatically, without you having to touch a thing.
401k
If your company offers a 401k, TAKE IT. If they offer any sort of matching, TAKE IT FASTER. I want to scream anytime I hear a coworker say “oh, I need to set that up”. You’ve worked here two years, Janet! What are you doing?! That’s potentially thousands of dollars you’ve ignored.
A 401k is your basic retirement savings account. Based on your age and preferences, they’ll invest a percent of your paycheck in cash in stocks, bonds, cold cash, and other things, and you get the returns when you retire. About a 10% salary contribution is generally recommended by everyone, but again, if you have to, start small. Just start. Plus, if your company has any sort of matching plan, that’s free money. If they say they match up to 3%, put in AT LEAST 3%. Now you’re immediately at 6%, and you’re saving for your future. $50 a week for your, let's say, 30-year career (don’t think about that too hard, you’ll get sad) should net you well over a quarter-million dollars. Theoretically, you’ll get raises over time. Hopefully, you’ll even get promoted a time or two over that 30 years. Then you’re looking at much, MUCH more.
The perk of a 401K is it's pre-tax. Meaning, you don’t have to pay taxes on that cash before it goes in. You’ll have to IF you take it out early, but we’ll talk about that more in-depth in another rant — I mean, carefully-worded article.
This is your forget about it money. Hopefully, you’ll never need to touch this and it can continue to grow until you need it in 30+ years. If any of us Gen X, millennial, Z’s actually get to retire... If your company doesn’t offer a 401k, you can open your own account, but there are also other options.
Investing
There are a few places you can open your own investment account. I’ve used and support ACORNS (click it), and if you’re young or broke or both… $10. That’s all I’m asking. That’s all it takes to get started and invest some money for yourself and your future.
Start with 10 bucks. An Acorns base account costs you $1 a month for a simple investment account. Very much like the 401k That means they’re taking that $10 and putting that across multiple investments. Stocks, bonds, etc… chosen by their professionals that will theoretically gain in value. 7% annually is generally seen as a “good” return on your investment. Meaning if you have $100 you’ll have $107 after a year. That maybe doesn’t seem like a great deal when you put it so plainly, but scale that up and it starts to matter. Even if you’re only putting in that $10 a week for 30 years, at that 7%, you’re potentially walking out with over $50,000. There’s your new car. There’s a down payment on a modest home. And that’s for doing the BARE MINIMUM. Also, consider a few things…
A. That money wouldn’t have made a dime in most banks.
In fact, in some banks, you may have very well lost money. With bank fees, inflation, and corporate bullshit, your money is pretty consistently losing value just sitting in a bank. All banks are not created equal, however, and I encourage you to do some homework, check nerd wallet, or another trusted source, and find the right bank for you. The internet is a thing so you aren’t stuck with whatever bank you have in town. There are options with some pretty competitive rates and perks.
B. Make your money work for you.
You’ve been on the internet, you’ve seen this quote. I’m so sick of it. It’s usually used to sell some scheme, some fuckb*y with a fancy watch he borrowed or, most often, shitty money accounts quoting “rich people make their money work for them,” then provide you with absolutely NO explanation of what that actually means. This. This is what that means. In the simplest possible fashion and in a MUCH smaller scale than Elon and Bezos, sure, but your money is now making money.
The cash you’ve put into your investment account is now making money on itself (fingers crossed). Congratulations, you’re rich now. Well no, not quite, but you ARE more informed than all those people I just mentioned. So put on an air of smugness and enjoy.
Tiny bonus — Acorns also have a round-up feature that I’m a big fan of. Basically, you spend money and it rounds up that change to the nearest dollar. That change gets put into your account and invested. Finally, you can get money or percent of your purchases back from various partners. Since so many companies from Honey to major credit cards do this now, I won’t dive into how this works; you probably get it.
Invest more
Basic investing — check. You’ve got a few dollars saved. You have some cash flowing into your investments with each paycheck. You’ve got cash leftover? Weird, but alright. Two options you may want to look into: a personal trading account and IRA’s.
Trading
RobinHood (go clicky) or public.com — ok, this is slightly more advanced stuff, but it doesn’t have to be scary. With these platforms or others like it, you’ll be investing YOUR own money on things YOU choose. Crazy right? Sign-up is super simple and you can get rewarded with a free stock for signing up friends (that’s how they get ya!). But, seriously, it’s a great free entry into stock trading. Just make sure you’re doing the most important part…
Do your research!
Do your research on topics or industries you know and care about and you may, pretty easily, crush that average 7% return. Again, this is for AFTER you have long-term savings and other investments in place. Do not risk your financials or your family’s financials in the stock market or digital coins. Plus, any investor worth a damn will understand the stock market is a long play. You’re not here for a quick buck. You may get lucky and it happens from time to time, but if you don’t trust a company to go the distance of 10 or 20 years for your investment, keep looking. Those quick trends can hurt as many as they help.
Be smart about your research and don’t listen to the bro at the water cooler who says that “doge is going to the moon.” R. E. S. E. A. R. C. H.
IRAs
An IRA is a great way to invest the extra cash that’s burning in all our pockets. (lol, what?) You’ll see two main account types.
Traditional IRA - Similar to your 401k, this is a retirement-leaning account. Your contributions are tax-deductible. Awesome. You’ll pay no taxes on the earnings until you retire. Awesome. But you can’t really touch it until retirement without penalties. Less awesome. At which point, it’s taxed. Bummer. If you don’t have a 401k, this is a great option. If you’re supplementing your 401k or just storing extra nuts for winter, here you go.
Roth IRA - Closer to your general investment account, you’ll get no tax perks with a Roth. You can, however, withdraw your investment with generally no penalties or taxes, making this a much more flexible option if life happens and you need to dip into your cash.
There are at least a thousand places to get an IRA account, but if you’re using Acorns to invest, I find it’s nice to keep things all together. $2 will get you an Investment and IRA based on your needs.
Guess what? Chances are, you’re not getting that Ferrari. You’re not getting the neatly-piled $100 bills in your private jet to Vegas. But, you’re here in this moment, young and broke. Maybe you’re old and broke. Again, no idea, but you have options to have a pretty awesome and comfortable life with just a few decisions you’ve read here.
So, there you have it. You can quite literally set up all these over your lunch break or even during a bathroom break if you’re feeling adventurous. I genuinely wish this is something they taught in high school. I could have used it, yet… Here we are. If this article helps one person, I think I’ll call it a win. Do enjoy and keep an eye out for other adulting 101 rants.
For legal reasons, “this article is for informational purposes only. It should not be considered financial or legal advice. Consult a professional before making any major financial decisions.”
