This is an interesting problem for anyone, especially since pensions are no longer in existence so all the responsibility falls on the individual. It is hard to convince someone in their 20’s that their happiness in 40/50 years depends on saving today. But maybe someone a bit closer can give some experience to help, and no it is not all sunshine and rainbows, just the facts that may keep you from making painful mistakes.

A preface: I am not in the 1%, I started out of school making good money, but nothing solid due to the dot-bomb era. Yeah graduating in Business/IT 1999 looked great till 2000… 6 jobs in 2 years and finally got something solid out of my field for 50% of what I made out of college 2 years earlier. Now I make good money, but I am not nor ever have been making crazy money, I just managed it well as described below and didn’t make the single biggest money mistake you can make when your young and broke: CHILDREN.

As someone who just had a child and turned 40 I look back and thank my stars my parents did their best to instill financial and child bearing discipline in me, they had me in their late 30’s and they had traveled, both had masters and were infinitely patient with me, they had lived their lives and wanted 100% of their time to make me a great person. They gave me the gift of a private education, lots of activities for me to explore what made me happy and helped some with college, but made me work/get loans for about 50% of college. Did it work perfect NOPE I had a hard head so some of it took time to sink in, but when I turned 28 I got serious and saved the whole 15% in my 401k and started paying everything off ASAP. Yeah it sucked at first, no lie, but once you reset your standard of living you just don’t miss it anymore and since the 15% comes off the top as you get raises you never notice because you still get a raise, just 85% of it. If I knew then what I know now, retirement in my early 50s would have been possible, heck easy.

Now here are the good/bad parts for the 20 somethings who think how much it will suck to do this. In my late 20's/30’s because I had saved/paid off so much I took a month in Australia and a few years later 2.5 in Europe without bating an eye, one year I decided not to work one summer just to delve into some philosophy books while sitting by the pool, and during 90% of the time could go out to eat whenever I wanted with whomever I wanted and pay for the table just to talk to people I found interesting. I work leading two charities in my spare time and have established some level of work/life balance, with the new kid that will probably have to be re-balanced as anyone with kids will tell you. Retirement can happen any time after 59 assuming I lose 50% of my income, the market is flat for 20 years, and I am unemployed for 2 of the next 19 years. Kids college fund, done (assuming a 5% rate of return on the money and college costs rising 9% per year) and he is a week old. BUT it means I put off having kids till I was 40 and maximized savings in my late 20’s/30's, drove the same car for 10 years (good car and took care of it), now I have two cars and their very nice, but not a brand new European sports car, didn’t buy the biggest house, or newest electronic gadgets and learned how to make/save money doing things beyond my day job. I swear if you can read cable/power/water bills and know how the system works you can save 1000’s to 10000’s over 20 years.

Did I have student loans?, yep 30k+ but I have 2 masters and am working on a third for fun and all my student loans are 100% paid off. Car notes / house notes, yes for both in my 20s/30s. Today all I have is the remnants of a house note I will pay off in the next 24 months, or faster if I feel like it. So not quite 40 and debt free, but close enough since my note is less than 5% of my net monthly income. Did I make some financial mistakes, yes I did, in my 20s ran up credit cards and killed my credit score. In my late 20’s bought a house for too much with a million problems (see Tom Hanks the money pit, not as big, but I did have some crazy electrical adventures with 90 year old stuff, I think the part with the burning electrical leading to a flying turkey was taken from my house). Even had a divorce in their which for all you kids is the equivalent of an atomic weapon on your financial plan, listen up PRENUPS are a must, yes you love your mate, but they can change in 10 years and go crazy. You wouldn’t skydive without a parachute never marry without a PRENUP! But if you keep your eye on the prize (Financial freedom and personal happiness) and don’t give up you can get through this all and enjoy life.

Back to kids: AKA the biggest financial endeavor you will take and your most important legacy BTW there is no “save game/redo” on kids I have seen older/experienced parents please confirm :)

Now my friends who had them young say it was great, but was it? I asked them some questions and they didn’t like what they had to say. Did they have time to spend with the kids, NOPE always working. schooling, scraping by. Could they send their kids to a pre school or later a private school, get them everything they needed or wanted so they could be successful, Nope. College fund, not really because they were still paying off their debt, buying a house, cars, daily expenses, etc and then hit with 2008 recession right when they needed maximum growth for the kids fund. Now they are 40 and guess what, they finally “made it” and the kids are… gone, the may or may not still own their house because of 2008 and they are just getting their debts from their 20’s (college, house, etc) under control. So they wasted 20 years killing themselves with nothing to show, but an empty nest, an underfunded retirement and kids who knew them from dinner and weekends. Even more sad to me is due to both parents working so much most of them were divorced because they just never saw each other enough and grew apart. Also at 40 you can’t just go out find someone new and party all the time, unless your a creeper, so they have to basically start over plus they will have to work even harder. You ask why would they have to work harder. Because now they have to make up all the time in their 401k starting late means you work twice as hard for half as much and they still probably have to help the kids in college and pay off their house/other debt. So 40's/50's they stuck saving every penny trying to scrape them together to retire in their late 60’s praying Social Security will help enough they don’t live in poverty or off their kids when they retire/are disabled/or suffer serious medial issues.

Me I have a job where I can work from home 2 months a year and get 5 weeks vacation, plus a 2 week shutdown so 7 weeks of 100% quality time with the kids. I have the patience to deal with the screaming baby, post birth hormonal wife and the financial security to hire help if I get overwhelmed. Yeah I can only run 1 mile in 8:00 and sound like a dying cow when I run that fast, but do you think my kid will care that dad doesn’t run 6 minute miles? I think he will be happy that I spend days, weeks and years with him, not saying high in the morning and dying on the couch at night because I just worked a 12 hour day. I will have the time to listen to him and guide him, take him to the park, museum, zoo, water park, travel around the world, etc.

So while money doesn’t buy happiness, good financial planning can make a whole lot of things easier so you can be happy and not stressed/broke for your entire adult life.

Good Luck 20 somethings may you have a great journey!