I've read before that something like a third of Americans can't cover a $400 emergency and about half can't cover a $1000 emergency, so she's definitely not alone.
My partner and I, 34 and 29 respectively, each have about $4000 in our separate savings, so about $8000 total to our names in liquid cash. In this economy, that feels like a miracle and a blessing but we know that's not stellar savings.
I have about $8.5k in my 401k and my partner has his own. We're a bit behind in that department but we're upping our contributions every year and we're both very lucky to work for companies that also contribute to those accounts. We're looking into investing and some other options to help prepare for the future.
Neither of us had a good start to finances. We both came from financially illiterate and abusive homes (I was also raised by grandparents and was homeless twice by the age of 19, so not a good start). We've had to learn everything on our own. I have no debt, and my partner is paying his student debt (we've paid off nearly $3k this year alone and will be down to $10k by EOY). We're both relatively new to credit and we're working on building credit. We drive a 12 year old paid off car and our next financial goal is to buy a safer, more reliable vehicle. We're not expecting to own a home for a long time.
Ultimately, we both expect to work well into old age because we have no hope of social security still existing when we reach retirement age. I highly doubt we'll be able to fully retire. We're just hoping that we'll have enough of a safety net that maybe we can just work part time when we're old.
ETA: Thanks so much for the words of encouragement and wisdom, internet strangers 💗 We've had to learn everything on our own through research and kind strangers online like you. It's nice to know we're not too far behind and are on the right track. I shared our story so OP and others know that they're not alone in feeling "behind." I didn't expect so much encouragement.
I also didnt get a good start with finances growing up super poor. I got lucky tho when I was 18 I got a job I would attend after trade school. My boss took a liking to be and when time arrived to be eligible for a 401k account he sat me down and explained everything to do with finances. He didnt have to do that but I learned a lot and started saving before I got used to having the money. My entire 20's i was maxing out my 401k. There were plenty of times where id be scaring by and wondering why im putting so much away instead of living a more comfortable life. Now at 39 im sure glad I did what I did. But man im known as the cheap guy in my friend group cause I chose to invest rather than vacations and cars. You seem to have good heads on your shoulders im sure you guys will figure it out and come out on top!
Thank you for the encouragement! We truly try to live within our means and save as much as we can. We feel blessed to be as comfortable as we are in times like these, and we're trying to be smart with our money.
I'd argue that growing up super poor and getting that kind of advice was a great start with finances.
Your start was pretty similar to mine. Now I'm getting close to retirement, and I can absolutely assure you that skipping a fancy car for savings makes a huge difference down the road.
If I can offer any advice, it's to not skip too much on new experiences like vacations. We only have to much time at any age to take advantage of our health for great experiences.
I try to do that with my interns. I give them a copy of the intelligent investor (written in 1949, still best investing book on planet). Also explain 401k, investing vs speculating, get fidelity or vanguard account, etc.
I have a boss like this. I've worked for the same company since I was 22 (34 now). At like 26, he got tired of nagging me and a few others about it and automatically enrolled us in 401k with an option to unenroll (he did this after our annual raises). I never unenrolled and cannot tell you in words how grateful I am now to this man.
I moved on from the company where I met him. But we still get together for lunch once a year. Im greatful that I ran into specifically 3 people in my first job in my career that really took the time to give me advice. My boss on finances. Another co worker on career advice and the 3rd on life advice as I was dirt poor. Down to a quarter in my checking every pay day and my relationship with my gf was terrible. I value those people more than they know. I get together with all of them to this day.
Hey, internet stranger, I wanted to let you know that you're doing a great job despite incredibly difficult circumstances, and I'm proud for you. $8K in liquid cash, and a 401K is a solid start. Keep going. You sound like good people. I'm pulling for you.
Don't worry, you're not too far behind. I didn't save a penny until i was 26, didn't get out of debt until 27 and now im on track to retire early. You don't even have to sacrifice everything. Just take 5k and set it aside for emergencies only, pay off your debt, and then invest 15% of your pay for the next 20 years and you will be shocked at how far ahead you'll be, you may even retire before 65.
You're young. If you continue to do what you're doing (saving what you can and planning on increasing your savings rate), and avoid lifestyle creep, you'll be fine. Keep working your plan - you're doing it right.
I've seen those stats, too, and it's hard to believe that many people are broke. Most people don't have the discipline and self-control to become rich.
I didn't start my retirement savings until 30 because I went to grad school and was making $29k/year and paying down student debt from undergrad, also had no employer sponsored retirement benefits. Once I got a 'real' job, I just kept the same lifestyle I had as a grad student, contributed the maximum tax-deferred amount allowable to my employer sponsored 401k and the max contribution to a Roth IRA, it doesn't feel like a big burden since my take home pay was still a little more than what I had been used to before.
Today I'm 37 and have just shy of $450k in my accounts and no debt. I had a meeting with a fidelity advisor and they gently suggested I pull back on my contributions and spend some of my money now, which was weird to hear after feeling like I was behind my entire adult life.
Don’t sell yourself short. You realize your issues and are turning it around. You have PLENTY of time to become wealthy as long as you stay smart. You could even retire early if you stay hyper-vigilant.
Study up on 3 things and you will be on your way:
1) To get out of the hole, Dave Ramsey’s 7 Baby Steps (not any of the crap he sells, just follow the steps themselves).
2) To invest, Google and learn the tenets of this : “Boglehead”
3) Read “The Simple Path to Wealth” -JL Collins
Treat these as the 3 financial gospels and you will get there.
You guys are doing it right and you'll get there. Don't mind me dropping some unsolicited things I might suggest you do:
1. Open a roth IRA if that's an option, the money you put in you pay taxes on now but it's tax free in retirement. Additionally if you absolutely must, you can take out as much as you've contributed without penalty.
2. Do you're own due diligence on your investment choices, if someone is trying too hard to get you to buy a certain stock, run. A good place i like to recommend while you get your feet wet is looking around your house at the different companies and brands. It isn't guaranteed to be a superb investment, but, you have a baseline understanding of their products and the use cases/demand which is better than going all in one something you have no clue about imo.
3. Consider interest rates vs. Expected rates of return. If your partner's student loan is exceptionally low(less than 5% interest) it may be better to keep making just minimum payments and invest the rest since the market on average returns 10%. Ultimately do what works for you though, personal finance doesn't always need to be mathematically perfect, often the mental portion is as important, if not more so, than doing the optimal things.
Ultimately I'm a layman and not an advisor or anything but I love people trying to better themselves. If I can help you with any generalized information, I'd be happy to give you my two cents. If you're all set congratulations! I wish you two all the best!
Please take a moment to reflect on your accomplishments at this young age and feel a surge of pride. Coming from a totally regular or even wealthy background it would still be a feat, but also to overcome difficult circumstances and get where you are is awesome.
It's a really hard time for young people. Having savings and a plan is the result of hard work and a thousand tough decisions over the years. Well done, keep kicking ass and taking names.
Another interesting addition to that fact is that it extends well into income ranges that you'd think would have more. I forget the exact breakpoint, but like, a huge percentage of even people who make six+ figures still don't have $1,000 available.
The $1,000 dollar emergency thing is absolutely true, without pet credit / insurance I would have had to put down two of my dogs instead of paying off their surgeries in payments
I don’t know if it helps for your situation, but my parents, my uncles who moved from lower middle class to upper middle class sat me down and said “ 50% of your salary goes for your necessities, 20% for savings, 10% for emergencies, 10% for gold (Im south asian), 10% for things like eating out/ watching movies/ shopping etc”
“Never buy something because someone purchased/ forced you to by peer pressure, stay grounded “
Doesn’t matter the country we lived in we followed that principle until we started earning better n better and only have to spend 20-30% for necessities and more for investments.
Our friends used to tease us for using 5-6 years old iphones, or using 12 years old car even when we are earning 350k per annum. We didn’t see any issue, our car was working great, once I got issues with my back, we thought maybe time to upgrade car and spent according to our needs (not wishes) and got premium car.
I know most of people don’t have extra amount for special things, but if this advice works for you. Try it.
I genuinely don't understand how most people make it work. I've been staying with my parents since getting divorced, and because that means my bills are temporarily lower, I have some money aside now and am trying to save up for a small down payment on a home. But I don't even know how I'd afford one after I buy it, bc once I have a mortgage and bills, I'll be screwed the first time a major repair comes up. Literally what do people do when they have a major issue (roof, HVAC, etc.)?
I'm seriously thinking about just buying a condo with a monthly maintenance fee, or going back to renting instead. I joked to my brother (also living with parents) earlier today that my house will just end up being condemned as soon as enough things I can't afford to fix stop working. And I have a 6 figure income and am only looking at ~$250k homes. I seriously need to know how people making less cover these things.
Sounds like you're doing great! Especially not having support or a leg up in launching to adulthood. I feel so proud when I hear about adults your age having reasonable goals and actually working toward them instead of just throwing up your hands and keeping up with the influencers who are all buying the new trend every 3 months and taking vacations on klarna
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u/Unlikely_Couple1590 5d ago edited 4d ago
I've read before that something like a third of Americans can't cover a $400 emergency and about half can't cover a $1000 emergency, so she's definitely not alone.
My partner and I, 34 and 29 respectively, each have about $4000 in our separate savings, so about $8000 total to our names in liquid cash. In this economy, that feels like a miracle and a blessing but we know that's not stellar savings.
I have about $8.5k in my 401k and my partner has his own. We're a bit behind in that department but we're upping our contributions every year and we're both very lucky to work for companies that also contribute to those accounts. We're looking into investing and some other options to help prepare for the future.
Neither of us had a good start to finances. We both came from financially illiterate and abusive homes (I was also raised by grandparents and was homeless twice by the age of 19, so not a good start). We've had to learn everything on our own. I have no debt, and my partner is paying his student debt (we've paid off nearly $3k this year alone and will be down to $10k by EOY). We're both relatively new to credit and we're working on building credit. We drive a 12 year old paid off car and our next financial goal is to buy a safer, more reliable vehicle. We're not expecting to own a home for a long time.
Ultimately, we both expect to work well into old age because we have no hope of social security still existing when we reach retirement age. I highly doubt we'll be able to fully retire. We're just hoping that we'll have enough of a safety net that maybe we can just work part time when we're old.
ETA: Thanks so much for the words of encouragement and wisdom, internet strangers 💗 We've had to learn everything on our own through research and kind strangers online like you. It's nice to know we're not too far behind and are on the right track. I shared our story so OP and others know that they're not alone in feeling "behind." I didn't expect so much encouragement.