2893: Why Saving Money In Your 20s Is A Good Idea by Michelle Schroeder-Gardner on Building Wealth

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[00:00:39] [SPEAKER_00]: This is Optimal Finance Daily, Why Saving Money In Your 20s Is A Good Idea by Michelle Schroeder-Gardner of MakingSenseofSense.com. And I'm your host and personal finance enthusiast, Diana Merriam.

[00:00:54] [SPEAKER_00]: We're going to get right to today's post as we optimize your life.

[00:01:03] [SPEAKER_00]: Why Saving Money In Your 20s Is A Good Idea by Michelle Schroeder-Gardner of MakingSenseofSense.com.

[00:01:11] [SPEAKER_00]: Recently, I read Elite Daily's article, If You Have Savings In Your 20s, You're Doing Something Wrong.

[00:01:18] [SPEAKER_00]: There are so many things wrong with this article. The author in this article basically says that you should spend all of your money in your 20s, even if you have money to start saving in your 20s.

[00:01:31] [SPEAKER_00]: Saving money in your 20s to her means that you're boring, lazy, and just planning for your death.

[00:01:38] [SPEAKER_00]: To state the obvious, I disagree with her article.

[00:01:42] [SPEAKER_00]: I believe that saving money in your 20s means you're doing something right.

[00:01:47] [SPEAKER_00]: There is tons of horrible advice in her article, such as, quote,

[00:01:52] [SPEAKER_00]: What memorable experience does money in the bank give you?

[00:01:56] [SPEAKER_00]: How well-rounded can people become sitting at home watching their limited funds gain interest?

[00:02:03] [SPEAKER_00]: End quote.

[00:02:04] [SPEAKER_00]: As well as, quote,

[00:02:14] [SPEAKER_00]: End quote.

[00:02:16] [SPEAKER_00]: I read this article over and over again to see where the author would say,

[00:02:21] [SPEAKER_00]: Gotcha, April Fools!

[00:02:23] [SPEAKER_00]: However, that never happened.

[00:02:26] [SPEAKER_00]: I'm sure this article is mainly just clickbait to get people to head on over to their website.

[00:02:31] [SPEAKER_00]: I think the advice is horrible, and I'm hoping no one is following the advice of this author.

[00:02:38] [SPEAKER_00]: However, I'm sure at least a few people are taking her seriously.

[00:02:42] [SPEAKER_00]: There are so many reasons to start saving money as early as you can.

[00:02:47] [SPEAKER_00]: I don't think I've ever heard someone say,

[00:02:49] [SPEAKER_00]: I regret all the money I saved when I was younger.

[00:02:53] [SPEAKER_00]: In fact, it's usually the exact opposite.

[00:02:56] [SPEAKER_00]: Considering the fact that 36% of people in the United States have absolutely no money saved for retirement,

[00:03:03] [SPEAKER_00]: according to a survey done by Bankrate,

[00:03:06] [SPEAKER_00]: I think there are many who probably wish they had savings.

[00:03:10] [SPEAKER_00]: There is absolutely no reason to spend all of your money just because you want to.

[00:03:15] [SPEAKER_00]: It doesn't make any sense to me to blindly spend everything just because it's there.

[00:03:21] [SPEAKER_00]: Here are several reasons why you should start saving money in your 20s.

[00:03:27] [SPEAKER_00]: Number one, you can learn good habits now.

[00:03:31] [SPEAKER_00]: One of the top reasons for why many don't save and invest is because they claim that they don't know how.

[00:03:38] [SPEAKER_00]: Yes, the beginning of saving money and investing may feel like a whole new thing,

[00:03:43] [SPEAKER_00]: but it's possible and it doesn't have to be hard.

[00:03:45] [SPEAKER_00]: The sooner you start saving, the more it becomes more of a habit and the easier it will become.

[00:03:52] [SPEAKER_00]: By saving money in your 20s, you'll learn good financial habits that will help you well into the future.

[00:03:59] [SPEAKER_00]: Number two, leading a good life doesn't have to make you broke.

[00:04:04] [SPEAKER_00]: As you all know, I really dislike the myth that people who save money are boring.

[00:04:09] [SPEAKER_00]: That's just not true at all.

[00:04:11] [SPEAKER_00]: There is absolutely no reason to go broke and spend all of your money in order to have a good time.

[00:04:17] [SPEAKER_00]: I believe that you can balance living a good life along with saving money in your 20s.

[00:04:23] [SPEAKER_00]: There are plenty of ways to live an awesome life while saving money.

[00:04:28] [SPEAKER_00]: Yes, you can still see your friends, have fun with your loved ones, go on vacations and more,

[00:04:33] [SPEAKER_00]: all while staying on a realistic budget.

[00:04:36] [SPEAKER_00]: Number three, compound interest is a powerful thing.

[00:04:41] [SPEAKER_00]: Saving in your 20s is a wonderful thing, especially due to the fact that time is on your side

[00:04:47] [SPEAKER_00]: and due to the powerful impact of compound interest.

[00:04:51] [SPEAKER_00]: Compound interest is one big reason for why you should start saving money as early as you can,

[00:04:57] [SPEAKER_00]: especially for why you should start saving in your 20s.

[00:05:01] [SPEAKER_00]: Compound interest is when your interest is earning interest.

[00:05:04] [SPEAKER_00]: This can then turn the amount of money you have saved into a much larger amount years later.

[00:05:10] [SPEAKER_00]: And number four, just because you don't have wants doesn't mean you won't have needs.

[00:05:17] [SPEAKER_00]: One thing the author said in her article was that she doesn't save money because she has no wants in life.

[00:05:23] [SPEAKER_00]: This is a horrible thing to say, as you may have needs that pop up that require savings.

[00:05:29] [SPEAKER_00]: You never know if you'll have a medical emergency, lose your job, your car may break, and so on.

[00:05:37] [SPEAKER_00]: Having savings can help you get through hard times.

[00:05:41] [SPEAKER_00]: Plus, you never know how things may be in the future.

[00:05:45] [SPEAKER_00]: Just because you don't want to start saving money in your 20s now doesn't mean that you won't want to save later.

[00:05:50] [SPEAKER_00]: You'll most likely regret your past if you make the huge mistake of choosing not to save money.

[00:05:57] [SPEAKER_00]: Why not start saving money in your 20s if you can?

[00:06:02] [SPEAKER_00]: Saving money in your 20s is better than not saving anything.

[00:06:05] [SPEAKER_00]: What is the reasoning behind spending money just because you can?

[00:06:10] [SPEAKER_00]: I see no point in actively trying to make sure you don't have money left over.

[00:06:15] [SPEAKER_00]: Like I said earlier, there's no reason to spend all of your money just because you're able to.

[00:06:20] [SPEAKER_00]: It doesn't make any sense to me to blindly spend everything just because it's there.

[00:06:25] [SPEAKER_00]: In my opinion, saving money in your 20s is always a great idea.

[00:06:30] [SPEAKER_00]: Even if you're only able to save a small amount, that's much better than not saving anything.

[00:06:36] [SPEAKER_00]: Remember, time and compound interest are both on your side.

[00:06:40] [SPEAKER_00]: And this can turn the small amount of money you have saved into a much larger amount.

[00:06:46] [SPEAKER_00]: To summarize this whole post, you should start saving in your 20s if you have the ability to.

[00:06:56] [SPEAKER_00]: You just listened to the post titled,

[00:06:58] [SPEAKER_00]: Why Saving Money in Your 20s is a Good Idea by Michelle Schroeder Gardner of MakingSenseofSense.com.

[00:07:05] [SPEAKER_00]: And I'll be right back with my commentary.

[00:07:08] [SPEAKER_00]: Buy low, sell high.

[00:07:10] [SPEAKER_00]: It's easy to say, hard to do.

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[00:08:11] [SPEAKER_00]: As someone who wasted a lot of money in my 20s, I wholeheartedly agree with Michelle that saving money while you're young is a very good thing.

[00:08:20] [SPEAKER_00]: I had the attitude of, oh, I'll figure out investing later when I have more money to manage.

[00:08:27] [SPEAKER_00]: But if I would have had any understanding of compound interest, I would have known that the earlier you start, the less you have to save and invest overall.

[00:08:38] [SPEAKER_00]: That's because the longer your time horizon, the heavier lifting compound interest can do in growing your wealth.

[00:08:46] [SPEAKER_00]: I went from blindly spending all of my money to getting out of 30 grand of debt in 11 months when I was 28.

[00:08:53] [SPEAKER_00]: From there, I started saving and investing 60% of my income until I retired from my corporate career at 33.

[00:09:00] [SPEAKER_00]: This was one of the most exciting times of my life.

[00:09:04] [SPEAKER_00]: It definitely wasn't boring.

[00:09:07] [SPEAKER_00]: During this time, I took two months off of work to walk the Camino, which is a 500-mile trek across Spain.

[00:09:13] [SPEAKER_00]: I bought a house.

[00:09:14] [SPEAKER_00]: I started hosting this podcast.

[00:09:16] [SPEAKER_00]: I self-funded a business.

[00:09:18] [SPEAKER_00]: I adopted a dog, and I met my Midwestern gentleman.

[00:09:22] [SPEAKER_00]: I didn't feel restricted by saving and investing.

[00:09:25] [SPEAKER_00]: I felt creative and resourceful in getting my needs met.

[00:09:29] [SPEAKER_00]: And I felt an immense amount of gratitude that my high savings rate made all of this possible.

[00:09:36] [SPEAKER_00]: But that should do it for another edition of Optimal Finance Daily.

[00:09:40] [SPEAKER_00]: I'll be back tomorrow as usual, so I'll see you there for the Wednesday show, where your optimal life awaits.