My dad is a brilliant financial planner, wealth manager, investor, and saver. My mom and I also love to compare him to Larry David.
Larry David drives a Prius and could care less about what you think. My dad loves making fun of those keeping up with the Joneses and has an opinion on everything. My dad doesn’t understand the concept of a bridal shower and has no problem saying “no”. My mom laughs and rolls her eyes as he not-knowingly is living an episode of Curb Your Enthusiasm.
Last year on a flight to Ireland, the flight attendants were walking down the aisles with bags for “donations for Unicef”. My dad obviously isn’t listening to the nonsense announcements, so he’s completely unaware of what is going on. As the flight attendant passes by his seat (always the aisle seat, or else he won’t fly) and my dad tosses his garbage into the bag. The flight attendant looks at him mortified as his neighbor explains to him that she is collecting donations for Unicef, not garbage.
Just like out of a scene from Curb, people are appalled at his mistake, and he’s yelling “how was I supposed to know it was donations for Unicef! You shouldn’t be collecting donations in a trash bag!”.
My dad has many famous quotes: “Money can’t buy happiness, but it can buy some nice memories” and “thank God I moved out of New Jersey” (LOL). But my favorite quote of his is “start early, end early”.
As kids, my brothers and I would make fun of my dad for saying it every single time we went skiing. “We’ll be on the mountain at 9AM and we can quit by 1PM. Start early, end early“.
My dad should honestly trademark this. This quote has so much relevance in the saving and investing world I have literally become obsessed with over the past few years.
Saving for retirement as early as possible is so crucial.
Let’s take a look at an example:
Sandy and Brandy are 25 years old.
Brandy decides she is going to put off saving for retirement because she believes she doesn’t have any money right now to start contributing. When Brandy is 40 years old, she begins to contribute $500 a month to her retirement fund. At 65, Brandy will have $261,780.
Sandy found some wiggle room in her budget by renting a modest apartment, cooking most meals at home, and shopping sales racks. Sandy starts putting $500 a month into her 401K at 25 years old. At 60 years old, Sandy’s retirement fund will have $905,780.
I don’t know about you, but $905,780 sounds like margaritas, rounds of golf, and laying by my pool with my French bulldog. And $261,780 makes me start to nervous sweat.
I know what you are thinking, and I totally get it. Entry level jobs are not paying us these fat stacks we are hoping for, but you will thank your 25 year old self for this. If you can squeeze even $50 a month to put into a retirement account, it’ll make a huge difference compounding over 35 years.
The beauty of Start Early, End Early, is the simplicity of it. Saving for retirement does not have to be this stressful life event people make it out to be. You know how they say there is never a good time to break up with someone? There most likely is never going to be a time where you are like “Okay, I’m making an extra $500 a month and have no bills, so let me call Vanguard and start this 401K thing”.
In your 20s you will have college debt and probably a lower salary, in your 30s you will have a wedding to pay for, children to raise, and a mortgage. In your 40s and 50s you will be helping your children financially through college until they are on their own. But you cannot wait until you are 55 to start saving!
Be selfish! Think of yourself! This is an investment in YOU!
You know how you dread going to the gym but always feel good after? You might be dreading putting money into this intangible 401k account that you can’t touch, but it’ll be worth it.