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When you’re 25 years old, retirement seems so far away. Even though I have at least 40 more years in the work force (sigh) I still know that one day I am going to be burnt out from working 5 days a week- I already am! Eventually, I’ll need to stop working as hard as I am now to enjoy some relaxation except I can’t get to that point if I run out of money prematurely.
The problem is that when you’re in your early twenties, you’re trying to land your first entry level job, pay off your student loans, pay off other bills and save enough to move out of your parents’ house all while trying to have enough money for a social life. So how in the world was I supposed to save for retirement when I was already trying to save for the near future? Come to find out, it’s easier than I thought.
I was able to start saving for my retirement 90 days after I accepted my current position; this was when I qualified to participate in my employer’s 401(k) plan. Going into it, I generally knew what a 401(k) was for but the logistics behind it were foreign to me. In order to understand 401(k)’s more, I reached out to my company’s Financial Advisor to get some advice.
It’s the easiest first step- learn what a 401(k) actually is! Essentially, a 401(k) is an account funded through pretax dollars. The funds within that account can then be invested into different stocks, bonds, mutual funds, etc. and none of those funds are taxed until they are withdrawn. So really, there is a huge tax advantage!
Always check to see if your company offers a match because it’s free money! The most common match seen is “50% of up to the first 6% you contribute to a 401(k).” So for instance, if I earned $100 a paycheck and selected a 5% contribution, $5.00 of my paycheck would go toward my 401(k) and my company would contribute an additional $2.50.
Experts suggest that you contribute enough to get the full employer matching contribution but when it came to my contribution, I learned to go with what I could afford. I had a lot of expenses at the time and didn’t want too much coming out of my check, so I opted for a 3% contribution. When I started making more money and my company’s match got raised, I raised my contribution to 4%. At the end of the day, your contribution can be flexible. If you feel that you’re contributing too much or too little- change it!
As I just mentioned, your employer is very generous if they’re making contributions to your 401(k). However, all that money they’ve matched isn’t truly yours until you’ve complied with the vesting schedule. A vesting schedule is basically the time it takes for you have full ownership of your employer’s 401(k) contribution.
For instance, let’s say that my 401(k) plan is on a five-year vesting schedule that gives 20% ownership after the first year and then 20% more each year until I gain full ownership (100%) after five years. After two years, I would be 40% vested! If during those 2 years my employer contributed $5,000 but I left the company after just 2 years, I would keep only $2,000 of the $5,000 matching contribution (0.4 multiplied by $5,000) and forfeit the other $3,000.
A large benefit to having a 401(k) is that it can follow you throughout your career! So if you were to switch jobs, your 401(k) doesn’t suddenly vanish. In fact, there are several options you can decide on to continue contributing to your 401(k). For example, you can completely roll over your 401(k) into your new employer’s 401(k) plan.
Investing in your future doesn’t have to be scary! I frequently pay for $300+ flight tickets (long distance relationship), have several monthly bills to pay and have a slight clothes shopping addiction yet I am still able to put money aside in a 401(k). If I can do it, you can do it too!
Category: Saving & Investing Money
You just got home from your beach vacation. Instead of unpacking, you spend hours scrolling through photos reminiscing about your time away. But then reality sets in when you realize it is Sunday night and you have to work the next day. Your stomach grumbles but the fridge is empty because you haven't been grocery shopping for 2 weeks.
It is officially summertime, you’ve put in the request for some time off at work and you’re ready for some much needed R&R! You finally start to plan out your vacation getaway, and then… you see that the expenses are adding up quickly. The last thing you want is to arrive at your destination and realize you’re out of money. So how do you plan a vacation without overspending, that also fits your budget?!
Spring is finally upon us! While most people are thinking about spring cleaning their homes, it is equally as important to think about cleaning your finances. Yes, just like that one crinkled shirt hidden in the depths of your closet that you promise “you will wear one day” – your finances need some reevaluating, too! So, where do we even start? Here are a few tips and tricks to start spring cleaning your finances:
Before we start, I already know what you’re thinking, “Olivia, you’re not good at saving money. Is this going to be a huge flop like the ’No Spend November‘ challenge?” And my answer: potentially. I always do my best to be transparent when it comes to money… and I am a work in progress! I cannot guarantee this spending plan is going to be my “a-ha moment” where I get my life and finances together, but it is worth a shot!
Ah, February – the month where love is in the air and, for us single folk, it is the month where we get amazing deals on post-Valentine’s Day chocolates. In February, relationships are celebrated with romantic dinners and roses, however, there is an important relationship that often goes uncelebrated – your relationship with yourself!
When you’re 25 years old, retirement seems so far away. Even though I have at least 40 more years in the work force (sigh) I still know that one day I am going to be burnt out from working 5 days a week- I already am! Eventually, I’ll need to stop working as hard as I am now to enjoy some relaxation except I can’t get to that point if I run out of money prematurely.
When my mom was growing up, my grandparents would pull off the clown car illusion of stuffing every neighborhood kid into their car to go get an ice cream cone every Friday night. There were days when my grandparents had only a couple dollars in their pockets, yet, they never turned anyone down.
The painful truth for most people my age- we have no clue how to file taxes. And what do you do when you have no clue how to do something? Ask your parents!
When I was 10 years old, I envisioned that by age 23 I would be an “adult.” I’d be married and living in a colonial home that I’d raise my family in. Fast forward 16 years. At 26 years old, I am not married, I still live at home with my parents and I couldn’t imagine having kids of my own right now. It seems laughable now but how did my 10 year old vision change so drastically over the years?
Is anyone else confused at how it is already 2022?! Growing up, I always felt that the years were so much longer. However, the older I get the more I realize how quickly each day goes by. I began my career at the credit union when I was young and fresh out of college. Now, I am in my late 20’s and my back pops when I bend over!
Hi my name is Olivia and I am a total clothes horse. I buy for a mixture of reasons, including being a spin instructor so always “needing” new workout sets or severely overestimating the amount of times I go outside my house. In reality, I wear the same t-shirt and sweatpants every day (yay for working from home!). Essentially, I have spent so much on clothes that my bedroom has started to look like a TJ Maxx popup shop.
At one point in my post-grad career, I had to temporarily switch to an Income-Sensitive Repayment Plan. This option stipulated that the loan payments were going to be based on my annual income. I was only on this plan for about one year but I was paying almost $200 less than what my regular payments were supposed to be.
When I was young, I was gifted the coolest plastic safe. It was deep grey with a bright purple handle that you would spin to open and it had clinking sound effects whenever you opened the safe and deposited money. Since this was before I had a savings account, I threw all of my money in there until it would all fall out when I opened the safe.
According to a survey from CreditCards.com, “47% of Americans are carrying credit card debt.” This statistic would make my grandfather furious if he heard it. He would often say to me, “Vivi, the world started to go downhill once they introduced plastic money!” Following my grandfather’s testament to the downfall of society, he would then tell me the story of how he used to always leave a wad of cash in his work locker for emergencies.
If you’ve been a regular reader of the ThinkPink blog series, you should be well-versed on the importance of a budget. When it comes to saving money and having a plan, a budget is one of the best ways to take control of your finances and reach your financial goals. However, I’ve found that following through with a plan can be cumbersome and while there may be momentum in the beginning, eventually it fizzles out before a goal is even reached. Why is that?
For some readers, the No Spend Challenge could be done with ease and that is awesome! For me, a No Spend Challenge is difficult. It is especially hard when participating during the month of November. Let’s cue the smallest violin here, again. For starters, every store is now fully stocked with their transitional fall into winter pieces, which is arguably the best season for creating outfits.
When you graduate from college, one of the first things that you start to save toward is getting your own place. You just lived on your own for 4 years and had that taste of “freedom.” You could go about as you pleased without having to tell your parents where you were going at 11:00 pm. And if your diet consisted of late-night pizza and mozzarella sticks then so be it. College is essentially a 4-year long sleepover with your closest friends but then one day it ends and before you know it you are back in your bedroom at home.
Since starting this blog in 2020, we've covered a wide range of topics. It has been fun doing deep dives into the world of personal finance. All this big thinking, though, can cause us to gloss over basic financial principles.