Save For Retirement While You're Young, Live Like Rockstar Later

Smart kids start saving for retirement early.

If your work offers it, put money in a 401k as employers often match contributions. No 401k, start a Roth IRA instead. Invest aggressively, with 90% in stocks. You’re young, and you’ve got time to sit out dips in the market while enjoying the historical 10%ish growth.

Bankrate says, “When you are in your 20s, a small consistent investment even for a short period trumps starting later and investing more money.” — BEN POPKEN

Retirement planning for 20-somethings [Bankrate]


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  1. jamesdenver says:

    My tip: If you live in a city where you can be car free do it. Or if you’re a young couple living together get rid of ONE car. If you can manage your life by bike, bus, walk, and occasionally rent a car for weekend getaways you “earn” thousands in a year by saving car payments, insurance, and registration.

    People may think you’re poor, but you’ll be able to save a ton of cash, and have extra spending money too. A car, especially a new car, is an enormous hassle and immediate “loss” due to depreciation. I see that as a hassle not a need, and would rather put my money in my house, 401k, savings, stocks, travel money, and a nice meal out once a week.

    Also regarding stocks: I prefer ETFs (exchange trade funds). You can invest in funds from all over the world by taking advantage of foreign markets. Plus it’s a fund, so you don’t pick individual stocks, just a sector and risk level that suits you.


  2. thrillhouse says:

    This is something Dave Ramsey has been teaching for years. an early start can make all the difference. read the Ben and Arthur link.

  3. rockstarfamily says:

    I completely disagree. This is the type of propaganda that we are fed everyday. It “sounds” nice, but in actuality, the big picture is not being considered. First of all, most people have little or no money saved whatsoever. The only savings that they have is in their retirement plans. So, when something awful happens and they need money – what do they do? They either charge it on their credit card or raid their IRA or 401k.

    While I am a great advocate of savings, especially in stocks, I take great issue with the way we are programming our young to save all or most of their money in retirement plans. First, we should be programming them to save 6 months of take home salary in a bank before attempting to save any money in investments. This alone will save many people from financial disaster when things go wrong.

    Next, you should plan for your medium-term goals (house purchase, early retirement, dream vacation, etc…) consisting of non-retirement mutual funds, stocks and high-yield savings.

    Then, and only then, you should contribute to your employer’s 401k only up to their match. If you have additional money after that, use it to fund a Roth IRA. Finally, once this has been exhausted, further fund your 401k.

    There is also a quality of life question that needs to be considered. Sure, saving for the future is very important, however a person needs to “learn” how to save. It takes discipline, and many savers consistently take money from their retirement plans and pay a penalty because this is the only savings they have. They have not mastered the “art” of saving – which in itself requires a lot of discipline.

    I have written a few blogs on this very topic if you are interested in more on this topic.


  4. enm4r says:

    @jamesdenver: I would second the car suggestion, but with an addition. If you think you’ll need a car for the weekend/travel, hit up family/extended relatives, or buy a cheap used car. I had everything planned, bought my new car in college, etc etc, but then when my plans changed and I realized I’d be living downtown Chicago, I knew immediately that I wouldn’t want to street park my couple year old car. Fortunately, grandparents were getting rid of a car that is already on it’s last legs, but considering I have it for “backup” and might only drive it once every couple weeks, it’s still really nice to have. Plus, insurance is next to nothing, and I don’t have to worry about the bumps and scrapes that happen with city parking/driving.

  5. jamesdenver says:

    Another tip, speaking of rock star families: don’t have kids. At least not until your financially sound and in your late 30s.

    Yes it sounds clinical and cold, but kids are an expense, and before having them you should examine and detail it down to the smallest numbers and variables – then padd for contingencies.

    There’s plenty of time to have a big family if you want – I don’t get why couples in their mid 20s are insist on having two kids before living a little and gaining some financial and life experience.

  6. timmus says:

    I feel very skeptical about a lot of investment advice as I see the dollar declining sharply over the coming years. I’m more interested in things like inflation-protected securities and silver. Seems like real estate would be a good long, long term investment (even with a bubble), but taxes might negate a lot of that.

  7. HearsMusic says:

    I think the factor that’s also being left out of this equation is existing debt that many young people carry with them out of college and even high school. What if they have $10,000 or more on a high-interest rate credit card, plus student loans they have to pay off? Would contributing to their 401k/IRA at work be the best use of their hard-earned money? I’m really asking because I don’t know the answer.

    Husband and I have been contributing to retirement accounts since we first got married almost 10 years ago and he monitors them religiously to get the best return while we’re still relatively young. We don’t have very much debt, and own a house and two cars. We also don’t have six months saved but are working towards that goal.

    I’ve had this discussion with coworkers recently regarding whether they should pay off high-interest credit cards before starting a 401k contribution. My thinking is that they should contribute any amount, however small, due to the employer matching while still trying to pay down debt but they don’t really see the point.

  8. jamesdenver says:


    I’d pay off the high rate cards and any high interest debt while contributing modestly to my 401k (at least enough to get the match).

    I think it’s understood you should be hammering away any debt before playing Warren Buffet – but people still don’t get it and can’t put down the plastic.

    To me a homeless guy on the street with NOTHING is far wealthier than a guy upside down on his house that owes 25k on his cards and leases a car.

    The guy with nothing is in the black when he finds a quarter. I’d rather have nothing than go through life owing people money. Mounting debt is crushing. I’ve had it, I’m debt free now (except house), and I plan on staying that way forever.

  9. tvh2k says:

    Agreed, contribute to 401k up to matching point. Also try to pay off credit cards with excess income and through cutting expenses, perhaps combined with a loan from After that, Roth IRA — You can always pull out the principal later but try to collect tax-free interest while you can. After that ($4000 limit/yr) go back to 401k, combined with short-term savings such as Online Savings accounts and maybe some equities (free trading:

    Just my 2c.

  10. eldergias says:

    @jamesdenver: I agree with the car suggestions, but I would point out that you can keep a car that you don’t use all the time and still reduce your expenses. If you are not driving it a lot maintenance goes down as does gas. If you do not drive to and from work, let your insurance company know. Some companies can give you a much better rate if you declare you do not use your car for commutation. With this method, you don’t have to get rid of your car so you can use it when you need.

    @rockstarfamily: I agree and disagree with you. I agree that 6 months emergency savings it the utmost importance, before retirement savings. However, I disagree with your midterm goal savings. IRAs have special clauses whereby you can remove money from the account without penalty for the sole purpose of the purchase of your first house. 401Ks can be rolled over (and should be) into IRAs (not Roth or else you will pay taxes on the money) after you leave the job offering the 401K. People in their early or mid-20s are not terribly likely to be with the same job for more than a few years. At the end of the job the money could be moved from 401K to IRA, then when they want to purchase a house they could take the money from their IRAs.

    @jamesdenver: I am 23 and I would like to have kids in my early 30s (thought I am terrified to death at the thought of that right now). I know I want to have kids, and my early 30s will be the edge of the safe time to have them. My girlfriend (who I might marry) is a laboratory biologist and has described to me the changes that take place in women in their thirties and that after the early thirties the likelihood of miscarriages and birth defects gets staggeringly high due to the length of time that the woman has had her period. After having their first baby, the hormone situation changes and it is safer to have babies later. But she said that if a woman doesn’t have her first baby by her early 30s it can become quite dangerous to have a baby after that.

  11. Triteon says:

    “Save For Retirement While You’re Young, Live Like Rockstar Later”
    In other news: Drink alcohol to get drunk!

  12. B says:

    I think it’s more fun to live like a rockstar when you’re young and can enjoy it, and then when your older, be dead.

  13. ladycrumpet says:

    If I were in my 20s again I would definitely have made a better effort to contribute to my 401(k). Although I didn’t have much income to spare, even a modest deposit from each paycheck would have increased in value over time.

    Regarding the paying down debt v. funding the 401(k) issue, at present I’m making a nominal deposit to my 401(k), while throwing everything I can against the credit card balance. I feel that once I get that paid off – hopefully within the next year and a half – I’ll be in a better position to fund my 401(k) more aggressively.

  14. spin_sycle says:

    I disagree about the car thing. We have two and good thing we do!! When one breaks down or needs some kind of repair, we aren’t stuck. We have a second car to fall back on.

  15. orchid777 says:

    As soon as your employer offers it, contribute a small amount to a 401K. I’ve been able to save $17,000 by age 29 with a measly $50 per paycheck of pretax income. My employer doesn’t even match the contribution.

    I have $30,000 in student loans and just finished paying off $10,000 in credit card debt. Even so, the 401K offers untold peace of mind as I begin to build up a 6-month emergency fund.

    Most importantly, I’ve put visions of sprawling HGTV apartments, designer clothes, and lavish trips on hold. In my 20’s and 30’s I’m sticking to a budget, increasing my income, saving for emergencies, paying down debt, and contributing minimally to retirement.

    Why shouldn’t I take advantage of a possible 10% return over the decades to come?

  16. Charles Duffy says:

    @B: I’ve known people (one particular couple comes to mind) who have a lot more fun after 50 than most folks do ever.

    (The couple I have in mind is childless, and made some very smart real estate purchases in the California Bay Area a long time ago. Neither of those, I suppose, can hurt).

    The age-is-just-a-state-of-mind people do perhaps have something of a point.

    (Actually, my Spanish teacher from High School might fall into that category too; she was a wonderful silver-haired lady with a photo album with at least one photo from every country in the world, and whose retirement plans included attending the running of the bulls and bungee jumping over the Snake River. Come to think of it, she also had a history of effective real estate investments).

  17. @jamesdenver: Part of it’s the whole ‘your eggs start deteriorating at age 27’ thing. I think people worry that if they don’t now it will be too hard or too risky to later.

    @rockstarfamily: I don’t think Consumerist meant to imply to do this before building your safety net: most of their savings articles do state to save 3-6 months of your pay first.

  18. jamier says:

    I disagree about the car thing. We have two and good thing we do!! When one breaks down or needs some kind of repair, we aren’t stuck. We have a second car to fall back on.

    I think the point was that you can make simple lifestyle choices so you don’t need a car. My partner and I don’t have a car and save sometimes $20,000+ a year over couples with similar incomes who have 2 cars.

    When we want a car for a getaway for a weekend it costs around $100 or $150. If we need a vehicle to lug around some furniture or whatnot, it costs about $20 in car-sharing fees (and we get to choose the vehicle we need — SUV, pickup, mini cooper, whatever).

    The extra free income is greater than the average income benefit of a college education.

  19. Papa K says:

    I disagree about waiting for the company match on 401k – that’s free money just by saving, why wait ten years for free money when you could be earning interest on it now?

    I say 401k to the match, focus on six-months savings for emergency income, focus on saving for a house, car, et al.

    The point in living like no one else now is so when they are scrimping and saving later you can live like no one else then and be the rockstar.

    Of course, it’s a balance – you don’t need to be a total prude growing up, either. It’s about recognizing that Social Security sucks and you’ll need to take care of your self when you are older (unless your rock and roll lifestyle does you in earlier).

  20. NeonCat says:

    Of course when you are living paycheck to paycheck, as I pretty much have my entire life, you do not have a retirement plan. Retirement is a fable to poor people. Or, to put it another way, when you are poor the only retirement plan you have is called “winning the lottery.”

    I’m sure I’ll be jumped on by every yahoo with an opinion. Whatever.

  21. kimdog says:

    I have to agree with starting as early as possible on the 401k, at least with regards to taking advantage of employer matching funds. I started in my mid 20’s with meager contributions. But at 34, I now have $35k saved. I have “raided” it for small amounts (1 to 2k), but in the form of loans, which most employee plans are set up to allow, so you are paying yourself back with interest.

    While I appreciate the need for emergency funds, and to repay debt, I had no discipline in my 20’s with regards to money. Had I forgone 401k contributions, I would probably still be in student loan debt, and have no significant savings of any kind at this point.

    If your employer has a match, it’s free money people.

  22. moniker42 says:
  23. jamesdenver says:

    I’ve read discussions and articles AGAINST the “6 month savings” cushion, saying it’s impossible and impractical.

    Even at $1,500 a month that’s almost $10,000. For someone with daily debts and bills that number is unreachable, and would take a few years to achieve.

    Plus, most folks in their 20s are capable of quickly getting another job to cover their bills. Barring medical issues, if we got fired today we could hit the coffee shops or retail joints and still pay our bills while interviewing.

    A few thousand in the bank is very smart for emergencies like when the furnace goes out or car repairs, but if someone has a stable job and life the 10k could be much better invested in something like CDs or stocks. Even in stocks if your truly need the money you can sell and hae it within a few days via checking account transfer.

  24. saram says:


    I completely agree with the 401k/ peace of mind stuff. I’m 25 years old and currently put 7% into my 401k, with a goal of 10% of my check going in by the end of the year (I’m inching myself bit by bit to the goal). My employer is awesome and matches 100% up to 5%. I still have student loans, and I have a mortgage, and a car payment . . . so my funds could definitely be going to different places. However, I feel a great sense of pride when I check my 401k online and see it growing. And it makes me feel more secure, just knowing that it is there.

  25. jamesdenver says:

    Oh thanks for the comments regarding timing of babies. I still think any time before 35 is too early, but I understand the reasonings. Or you can use your savings to hire that fertility doctor on “Lost”.

    By the way this whole article, “It’s good to save money” is completely obvious. The comments are more insightful than the overstated article. What’s next? “Sunny days are nice?”

  26. rockstarfamily says:

    @Rectilinear Propagation:
    You are probably right… I just wish that the 6 months of emergency savings was stressed as much as retirement these days.

  27. Gloria says:

    Regarding children, you can of course also adopt, although these does entail major additional expenses.

  28. rockstarfamily says:

    A few final comments:
    It is important to live “like a rock star NOW” and don’t wait to live. Experience life and enjoy it. At the same time, you need to try to have balance in your life (as others have already stated). Everyone always says “Don’t put all of your eggs in one basket”, right? Well, placing most of your money in retirement plans is just that.

    With that said, there’s no one-size-fits-all plan. My suggestions are just that. There are also other factors to take into consideration – debt, lifestyle, health, taxes, etc…

    Regardless of the approach, one thing I stand by 100% – you have no business investing in anything, retirement or non-retirement, unless you have a minimum 3 months (6 months recommended) of take home pay saved in a bank.

  29. rockstarfamily says:

    Good point, especially for younger people. In this case, I would say that once a few thousand dollars are saved, maybe they can begin investing, but they should slowly add to their emergency fund at the same time. As time goes on and responsibilities become greater, so does the need for more cash on-hand.

  30. rockstarfamily says:

    Even poor people have a chance. Start small, save $20 per week or pay period. Or $10. Something. Poor people can become devistated when the car breaks down and they can’t pay the rent. When I was younger, my first goal was $500 saved. Now that wasn’t much, but when the car broke, I had the money and didn’t have to worry about the rent. The next goal was to replace that used money.

  31. rodeobob says:

    I think an important distinction needs to be made between “retirement savings” and other saving/spending/investing behavior.

    As a general rule, I advise people to prioritize by interest rate. Pay off higher-rate debt, but if you can invest in something that pays a better rate of return than the interest cost of debt, do it!

    Retirement savings, though, doesn’t follow that standard. Retirement savings has some similar characteristics to the “6-months salary emergency fund”, only reversed. Both involve the “cost of capital”, and exposure to risk, but in opposite directions. Having an ’emergency savings fund’ means un(der)used money with a very low cost of borrowing. (ideally, zero) It means if there are unexpected expenses, they can be covered without incurring additional costs, but the underlying is the under-utilization of that money.

    Retirement investment works the other way: it’s earning a good return, but it’s not accessable in any real sense. Cashing out a 401k is expensive, and a terrible way to cover costs.

    The key is to identify factors that might contribue to a need for the ’emergency savings’. Do you have health care, or are you “self-insuring”? Does a lot of your current income go to debt-maintanence (paying minimums) or do you have a higher level of discretionary income? How old/reliabile is your primary mode of transportation? What’s your driving record like? Do you engage in certain “rockstar” lifestyle activities that carry a higher risk of unexpected legal or medical costs?

  32. eldergias says:

    @jamesdenver: I agree and disagree with your views on 6 months savings.

    I agree that you should not just have much money sitting in the bank doing nothing. My “6 months Emergency Fund” and savings are in the same account. All my non-immediate non-retirement money is in my brokerage account. Even if I am not trading the money I get 3.8% return. Investing in a low risk mutual fund can get you 5%. From the day you sell your shares you will need to wait 3 days for the money to be back in your account, then you can wiring money, write checks, or send money via EFT (free) which takes 5-7 business days. I just need to keep enough in the bank to pay one month of bills. As my paychecks come in, I pay off my bills and since I don’t spend all the money I earn some of it stays in savings. When I hit my “magic number” I transfer my extra money into my brokerage account and bring my total back down to one month in my bank account.

    However, I do not agree that a 6 month emergency fund is a pipe dream. First off, if you can’t save 6 months of money (not immediately, but over time) how are you supposed to have money to live one when you can no longer work? Just planning on dieing before you get there is not enough unless you are okay with the idea of being homeless. I’m not some money powerhouse, I’m 23, 2 years out of college. I recently started tracking my expenses, I’ve contacted all my credit cards and found out their hidden fees, rates, bonuses, cash back, ect. I’ve been watching with my spreadsheet how much money I spend each day and on what. Sometimes I let myself splurge a little, but that is because I know I can afford it after paying all my bills, and putting as much as I can (the max my employer will allow which is 20%) into my 401K. Also, why do you think that it is the easiest thing in the world to find a job? I grant you that in a pinch there probably will be some job you can get somewhere just to get by, but do you really want to count on being able to find such a job in one month? Or say you are in an accident and can’t work for a few months. Most people don’t have disability insurance to cover their lost wages. What are you going to do if you can’t work for 4 months due to injury? It may be difficult to do, but everyone can and should do it, even if it does takes years to do.

    @NeonCat: I understand that you don’t have a plan for retirement and that things are tight, but are you seriously spending exactly 100% of your paycheck every time you get it? If you are spending over 100%, then you won’t need to worry about retirement coming for you, because the creditors will get you first. Take on another job, or reduce current spending, something/anything to get under 100%. If you are spending exactly 100% (which is amazing by the way), there are always places you can cut corners and eek out a little bit more from what you’ve got. If your spending less than 100%, you have your retirement money right there. Whether or not you are using it to pay down existing debts, you are setting up your future if you don’t spend everything you make. If you truly have no plan for retirement and don’t even believe in it, do you really think that you will be able to work for the rest of your life? Granted, there are people who are in their 90s going to work just like everyone else, but there are a far greater number of people that old that are home or bed ridden that simply do not have the physical or mental capability to work. What happens if you become one of those people? Seems like a pretty bleak end if you don’t try to do SOMETHING to guard against that future.

  33. bdgbill says:

    I entushiastically second the No Car / No Kids suggestions. I have not owned a car for about 3 years and it’s been great. We spend about $200.00 a month on taxis and rent cars when we need to.

    I constantly hear my coworkers moaning about money problems. My girlfriend and I make average salaries but live quite nicely and worry free. The money we save on the car alone pays for a European vacation every year.

    We have both quit jobs or changed jobs when we felt like it and have also lived in 3 different countries together. I believe these things would have been impossible if we had kids together or either of us had kids from a previous relationship.

  34. jamesdenver says:

    Bdbill I’m with you 100%. My partner and I spend SELECTIVELY. That’s my keyword. We travel and eat out, but we don’t waste money on depreciating tangibles like fancy clothes, big screen TVs and like material things. Instead I prefer to “invest” my money on experiences like travel, a good meal out every few weeks and spanish lessons.

    Our goal in 7-8 years is to live for a few months out of the year in a location with a strong dollar. (Argentina, Thailand, etc). If we can somehow work it out with our careers we’ll be SAVING money while traveling – as there’s many beautiful corners of the world which you can live in a guest house or rent an apartment for a fraction on of the U.S. price. (hence my blog )

    And regarding eldergias’s good insight having a good bankroll will help facilitate that. And a good backup gives you some F.U. money. So should your job conditions deteriorate you can confientely interview at other places or take a month off without relying on your paycheck every single week, (as too many of us do). And good key phrase: Spend LESS then you make. Period.

  35. @jamesdenver: “At least not until your financially sound and in your late 30s. … Oh thanks for the comments regarding timing of babies. I still think any time before 35 is too early”

    That may be true for MEN, but the danger for birth defects SKYROCKETS for women at 35 if they haven’t already had a child. Waiting until 35 is a dangerous decision for women and if they know they want to have children, they need to SERIOUSLY discuss that with their doctors, particularly taking into account family fertility and birth defect histories.

    There’s also a major issue of being a young parent vs. being an old parent, emotionally and physically. And financially, the fact is that there’s never a financially “perfect” time to have children unless you’re a trust fund baby. Having a child at 39 (when my parents had their last) turned out to be financially more difficult than having one at 27 (their first) because now they’re trying to put the last one through college when they’re ready to retire and need to be making retirement changes. They had to live a lot more frugally at 27 when the baby arrived than at 39, but that passed as their earning power climbed.

    @HearsMusic: “What if they have $10,000 or more on a high-interest rate credit card, plus student loans they have to pay off? Would contributing to their 401k/IRA at work be the best use of their hard-earned money?”

    What we chose to do — we have over $100,000 in student loan debt (no credit card debt). Our employers do not 401(k) match. We have opted to pay off the variable-rate “commercial” student loans, which are currently at about 8%, before beginning retirement investing. They were a small portion of the total and we’re almost done; although they made up like 1/5 of our debt, they were 1/2 the payment, so basically as soon as we get them paid off, we can dump that “payment” into our retirement savings.

    In the meanwhile, we have built up the elusive 6-month cushion (or close to it, anyway). The rest of our student loans are fixed rate at 2.25% to 3%, so at that point it makes more sense to be in anything that makes more than 3% return — even a good money-market fund! We will pay those off over the long term, taking the student loan interest deduction, and investing in our 401(k)s and IRAs which will earn higher rates of return.

    This is also an emotional decision, however — we HATE having that debt hanging over us, but I can’t STAND not having retirement savings. So we’ll pay the student loan debt off more quickly than the scheduled 30 years by making lump-sum payments into the principle now and then, but will primarily focus on funding our retirement accounts and beginning non-retirement investing.

    Our first year was very difficult because we had such a HUGE student loan payment and virtually no savings, but budgeting tightly let us get “ahead” of it so we now feel fairly comfortable and in control of it. That first year I just felt sick to my stomach all the time, though, even though we had a plan and we were paying all our bills okay.

  36. bdgbill says:

    @jamesdenver: Hi James. Have you looked at Guatamala, El Salvador, Honduras? I have spent a little time down there. Cheap, beautiful, friendly locals. Live volcanoes, rain forests and decent infrastructure. I ran into a few retired folks down there living in villas with live in help that seemed quite happy.

    I think I would be wary of Argentina at the moment with the current political situation.

    As far as the career goes, I have been amazed at what both of our employers would agree to over the years. We just told them we were going and that we would be back in a year or so. We gave them lots of notice and both of us returned to our jobs when we got back. Of course there were no guarantees but it worked out well for us. Some friends of ours did the same thing and sailed their boat from Montreal to Key West and back over a year.

    I really feel like these experiences make you a better, happier employee in the future and the memories last forever.

  37. tz says:

    The market cannot grow at 10% historically when GDP only grows at 4.5% – otherwise after a few years the market will exceed the GDP, and then be larger than the entire value of all property and assets shortly thereafter. I know it is harder than Verizon’s 2 cents v.s. 2 dollars, but I would thing the Consumerist could do intermediate math. Of course, if inflation is going up at 20% (real inflation, not the hedonically adjusted CPI and PPI) the market can easily grow at 10% – which would mean a nominal 10% per year loss in value. Anyone notice Gold going from under $300 to over $600 in the last few years? Remember when the Dow was at 1000 in 1966, and 1982, while gold went from 35 to over 800? Or in 1980 when you could lock in double digit safe treasury returns in for 30 years (yes, 3 years to go).

    And do you trust Washington won’t raid IRAs to “save social security”, prevent child annoyance, support the troops, or whatever?

    A fool and his money are soon parted by another fool. A wise man waits until it accumulates then takes it from the fool.

  38. orchid777 says:

    @ jamesdenver:

    How refreshing to hear someone question the “After 35 Baby Rule.” I have some problems with this tidbit of pseudoscientific propaganda:

    1. What did women do BP (before the Pill)? I’m pretty sure they didn’t have their twelfth child at age 27. My great grandmother (I’ll repeat that – great grandmother) had her last child at age 40.

    2. Why do women emulate everything else celebrities do (eating habits, hairstyles, wardrobe) without realizing that these women are having children later and later?

    3. Parents often have second marriages with second “rounds” of children. My brother and two sisters, more then a decade my juniors, will have zero college debt. They also enjoyed a higher standard of living while growing up.

    4. I know what Newsweek tells us about the great baby dilemma, but most of my students’ parents are only ten years younger than my own parents. My students are in third grade.

    I admit Eldergias, I hadn’t heard about the hormonal changes that take place after the first child. Definitely puts a different spin on the issue, and I will look into it.

    For now, I’ll eat well, exercise, stay in shape, and save money. I want my children to enjoy the full benefit of my 35-year head start.

  39. jamesdenver says:

    @bdgbill: I’d love to explore central America more – I’m kind of a big city person though, and I’ve spent time in Buenos Aires and loved it. I was there during the ’05 provincial elections and loved see how passionate people were about the issues. And back to finance – the US dollar is 3:1. For visiting a world class city akin to New York or Chicago you can’t beat that.

    Orchid my parents are both older and they raised me just fine. In addition there financial wisdom growing up (ok thriftiness) means they had money to help me during college and treat themselves later in life.

    Anyway even though the article is an obvious no-brainer (save money duh) I enjoyed reading all the insightful comments.

  40. redclear55 says:

    i work as a financial analyst for a major broker/dealer. the main concept to keep in mind when invest early is “time value of money”. when you invest more money early on, compounding interest has more time to build up your retirement egg. while the 6 month back-up plan has merit on the surface, putting your money to better use will force you to maintain good spending habits where you will not need to raid the IRA, 401k, etc. the final recommendation when investing is to keep your overall asset allocation consistent. while most people start off with the appropriate allocation they fail to re-balance as the investments grow. this will hurt you when growing your portfolio efficiently. some investments are more defensive in a down market and will help preserve the growth you achieved with the flashier investments.

  41. Stepehn Colbert says:

    I’ll be too angry and death-fearing to live like a rock-star when I’m old, plus, I want the opportunity to have to steal and get away with it.

  42. bdgbill says:

    I run into people who are trying to “live like a rockstar” in their old age all the time.

    Don’t wait until your 60 to take that first trip to Paris. You will not enjoy it. You will spend all your time complaining about things like stairs, loud scooters and anything that is not exactly as it is at home.

    An old man (or woman) driving a Corvette is just depressing. Especially watching them climb out of it.

    I’m spending my money on the good memories that will keep me company in my rocking chair.

  43. thrillhouse says:


    I’ve read discussions and articles AGAINST the “6 month savings” cushion, saying it’s impossible and impractical.

    Even at $1,500 a month that’s almost $10,000. For someone with daily debts and bills that number is unreachable, and would take a few years to achieve.

    Thats exactly why FPU teaches that as Step 3. With Step 1 being a starter emergency fund of $1000, and Step 2 of paying off your debts. If you try to start on step 3, then yes, you are very likely to fail. You’ll see a lot of advice on the Consumersit and other sites – some good, some bad. Unfortunately, few of them have much experience with it, and do not have the steps in order yet.

    7 baby steps

    As for having kids. Have them whenever you and your spouse are ready – emotionally. I would recommend having some clue about finances first, but they are not the huge financial drain that some make them out to be.

  44. @orchid777: “1. What did women do BP (before the Pill)? I’m pretty sure they didn’t have their twelfth child at age 27. My great grandmother (I’ll repeat that – great grandmother) had her last child at age 40.”

    Orchid — as noted elsewhere, the question is when the FIRST child is born. If the FIRST is born after 35, the danger for birth defects skyrockets. If the first is born BEFORE 35, it’s considered much safer for women to continue having babies AFTER 35.

    However, danger of defects or problem pregnancies is higher after 35 in any case. (It’s also a little higher after 30 than before.) Most ob-gyns treat after-35 pregnancies as “potentially high-risk” and urge mothers to have more ultrasounds, etc., even if it’s baby #4 or 5 or 6 and the pregnancy has exhibited no complications.

    Either way, Orchid, the important thing is to talk to your doctor NOW about planning to have children LATER. She can help you make decisions based on your family history, your health, etc., and if you do decide to put off child-bearing until later life, develop strategies to protect your fertility and ensure a safer pregnancy.

    I’m not in favor of 22-year-olds popping out babies just to “beat the biological clock.” But many professional women (I am one) put off and put off and put off pregnancy for career and marital and financial stability, without considering the fertility issues, and then find themselves either having trouble conceiving or having problems carrying to term or having (God forbid) birth defects because it’s a first pregnancy in “late life.” (fertility late life, not real late life.) So talk to your doctor about your specific situation and your specific family history, so you can make a decision that’s right FOR YOU.

    (My own mother had her 4th at age 39 and it was as normal and uncomplicated a pregnancy as one could wish for. But that was a FOURTH with her first two before 30. She also said that when she was older, she found it took her body a little longer to bounce back after delivery and getting up in the middle of the night was substantially less appealing, but that was the biggest difference. Oh, and at the time she thought all the pregnancy clothes were for teenagers, not women nearing 40. :P )

  45. Charles Duffy says:

    @Gloria: Adoption incurs major expenses if one is doing it privately, yes — particularly for those who want a Caucasian infant. The state, on the other hand, has no shortage of eligible children — and works hard at defraying expenses.