I Didn't Make This Money Move in My 20s -- and I Regret It Big Time

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  • I didn't make a strong effort to save for retirement during the first half of my 20s.
  • As a result, I have a lot less money than I could've had.

It's a mistake I still bemoan.

When I first graduated college, I had a few key financial goals -- pay off the debt I'd incurred in the course of getting my degree, and build an emergency fund with enough money to cover at least six full months of living expenses. Thankfully, I was able to accomplish both goals relatively quickly. That's because I made the tough but ultimately wise decision to move back into my parents' house after my studies. 

Thankfully, my parents are wonderful people, and living with them was actually quite lovely. But once I'd reached those two goals, I promptly moved out, trading my somewhat small Brooklyn home for an even smaller apartment in Manhattan. 

Because I'd spent so many months living frugally and socking away money to pay off debt and boost my savings, I was ready to start enjoying some of my earnings at that point. And so during my mid-20s, I spent a lot more money on things like travel, concerts, and restaurant meals than I had in the past. 

One thing I didn't spend a lot of money on at the time was my retirement plan. Rather than contribute as much as I could, I contributed modestly and opted to spend more of my money on myself. But in hindsight, that was a costly mistake.

The downside of delaying retirement savings

When you fund an IRA or 401(k) plan from an early age, you give your money extra time to grow. Because I didn't push myself to prioritize my retirement savings during my 20s, I put less money into my account -- and have less money to this day as a result. 

Now to be clear, I don't fault myself for focusing on paying off debt and building an emergency fund before funding my retirement plan. If you lose your job or encounter an unplanned bill, you can't simply raid your IRA or 401(k) in a pinch without incurring penalties. So prioritizing my emergency savings was a smart move. 

But I should've been a little more cautious about blowing money on leisure and more focused on my retirement plan. I could have many, many thousands of dollars more to my name right now had I invested those funds over a decade ago instead of spending that money freely.

Do your best to save for the future

It's difficult to motivate yourself to save for retirement when you're in your 20s and that milestone is so many years away. In fact, the one thing I always told myself is that I'd focus on retirement savings once I turned 30 -- and I did make good on that pledge. 

But the sooner you start socking money away for retirement, the easier it becomes to grow wealth. So if you have the option to fund an IRA or 401(k) plan at a young age, do it. 

Of course, it's also important to strike a balance. If, after paying your essential bills, you're left with $600 a month, you shouldn't necessarily feel compelled to put every dime of that into your retirement plan and spend $0 on leisure. But should you spend $550 on leisure and contribute $50 to your long-term savings? Maybe not. In that scenario, a 50/50 split seems more appropriate.

Thankfully, I've been ramping up my retirement plan contributions since around my 30th birthday, so I've caught up decently on savings despite a slow start. But if I could go back in time, I'd spend a little less on fun things and pump more cash into my savings plan.

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