Obvious and boring as it may sound, I am convinced that saving money is the most effective way to succeed financially in the longterm. And I should know: As a millennial that accrued $40,000 in student loan debt before my 20th birthday, who gambled away my rent money on multiple occasions in my early 20’s, and who racked up five figures in credit card debt by the time I was 25, I have a lot of experience in what not to do.
For context: I was raised in the 1990’s in a middle class family, back when there was a middle class in the United States, but neither of my parents would be considered “good” when it came to money. Their biggest asset was always the house that they owned; they didn’t have any money tied up in the stock market or retirement savings. They weren’t irresponsible, per se, just ignorant. Their priority was taking care of my two brothers and I, and for that I think they did a great job.
But that is sort of the trap in growing up without any concept of money, especially in a socioeconomic setting like San Bernardino, California — one of the poorest cities in the country. When you come from nothing, even the something you do have feels like it’s nothing. I know that might sound backwards, but I spent the majority of my 20’s YOLO-ing away my money with the thought that (a) it wasn’t very much, anyway, and (b) I could always get it back. So I consistently made short term bets (whether literally, at a casino, or just in general) knowing that $200 here or $500 there wasn’t really a whole lot.
When I was 27, it was life changing when one of my middle-aged coworkers suggested that I start a Roth IRA. The concept of saving for retirement sounded stupid to me at the time, but then again I figured I had done everything else I could up to that point. I played my money fast and loose and at the end of every month I generally had about as much in my checking account as I did when I worked my first job for $10 an hour. Maybe the 50-something year-old who was about to retire knew a little more about money than I did. So I took her up on the idea.
To be real, my Roth IRA is a lifetime loser of roughly $5,000. If, over the last four-plus years, I had simply contributed the maximum and not gambled in the stock market, I would be about $5,000 richer. Nonetheless the number in my Roth IRA has grown year after year, at a mere pace of $250 per paycheck, and it’s true what they say: you don’t miss the money that you put away.
This article is about saving money. As a 31 year-old I agree that saving is not the sexy thing to do, but as someone who’s been converted and seen the light, I’ll say it has been a helluva lot stronger a strategy than whatever I had been doing before.
If you are able to save even $10 a week — a fair number that a majority of workers could probably spare — that comes out to $520 annually (given there are 52 weeks in a year). Assuming you are able to continue on that pace of saving $10 per week for 30 years, at the end of it you would have a nice little nest egg of $15,600.
Some (er, most) will read that and roll their eyes. I mean, $15,600 isn’t that much money over a 30-year span. It does, however, highlight the fact that saving a small amount of money now can go a long way. If you substitute that $10 per week figure with, say, $20, then the number grows to $31,200. If you swap out the $20 per week to $50, then the 30-year total shoots up to $78,000. And if you have the means to save as much as $100 per week, the final number balloons up to north of $150,000.
If you have a good job and the ability to save more than $100 a week, you can do the math from there. With a steady income and a bit of discipline, it is absolutely possible to have over $100,000 in the bank by retirement time. Easier said than done? Absolutely. I am not the financial advice guy; I am the opposite of financial advice guy. After banging my head against the wall for most of my adult life, however, and doing everything wrong when it came to money, I do feel I have some experience to talk about this.
As a common American, I find money exciting. It’s one of a few things that really gets me going. It’s been a blessing that I can count on like two or three fingers the number of times in my life I have genuinely been concerned about it, because a lot like a magic weight-loss pill (that doesn’t exist) I always kind of thought one day I would just all of a sudden be a rich person. I never had to think or put much effort into how I would get there. I simply knew it had to be.
Reality is what it is. The world never stopped moving to wait on my hopes and dreams. That whole saying about the definition of insanity — doing the same thing over and over and expecting a different result — finally caught up to me. It was then that I realized having a nice number in my checking account didn’t mean very much if I had over $10,000 in credit card debt. It was also then that I realized I couldn’t merely bank on snapping my fingers one day to have as much money in the bank as I always assumed I would.
To that end, saving has been a game-changer for my life. My current practice, which I’ve been doing for the last year or so, is to carry the least amount in my checking account as possible while still being able to get by with day-to-day necessities. Then, and only then, am I released from the burden of feeling like I have money to spend. The more I put in my regular savings account (which is automatically taken out every other Friday after I get paid), and the brief $250 that is transferred to my Roth IRA, the more I am removed from having a chunky number in my checking account that just screams for me to go gamble, or to go out and drink, or to go out and blow.
In a selfish way I am motivated by money. I’m motivated to make it, I’m motivated to have more of it than the next person, and I’m motivated by the thought that one day I can look back and know that my plan worked. I am more competitive than most, and it’s in the spirit of that competition that drives me to keep going. Also, what I’m doing now is literally the only effective way I have ever dealt with money. So there’s that.
But it’s also true that I was inspired to write this article with the intention of helping somebody else. I am a white collar worker and I do okay for myself. I can’t help, however, that I still (and dare I say always will) relate more with the working class. The idea of saving money has worked wonders for my life, but the $10 or $20 per week figures are not meant for individuals in my situation. It’s meant to show the $30,000 a year, or $50,000 a year worker — whose labor is significantly harder than people like me — that there is a way to shake themselves from the trap that I talked about earlier.
To this point I have beaten the odds for someone from a city like San Bernardino. For those who are grinding away at an Amazon warehouse, or who work at Wal Mart or Target, or who work in the service industry for minimum wage plus tips, all I’m trying to say is that there’s a better chance than not that the only way out is to save money now. There is never a bad time to start.
I was one of the lucky ones, fortunate enough to have worked with a bunch a 40-somethings and 50-somethings who had already established themselves in life. Who saw me, a mid-20’s kid who would have rather spent his money on gambling, alcohol, and drugs, and used it as an opportunity to guide me in the right direction. I still don’t know why I listened at the time, why I didn’t just thank them for the advice and keep it moving. But I suppose some of the best decisions I’ve ever made haven’t really been for any rhyme or reason. I just saw a fork in the road, flipped a coin, and every so often I am able to look back and know I didn’t fuck it up.
I have broken from a lot of traditions of my family over the years. Mostly I’ve done it to be a contrarian, which has its plusses and minuses. But there are occasions where the old way is the right way. My Depression-Era grandparents, who all they knew how to do it was to save, were right. As someone who tries to be forward-thinking, yet identifies with the old school, and simultaneously yearns for the perfect balance in the modern world, I can’t help but say there are times when I have to throw up my hands and admit that people have tried, and people have failed, and at the end of the day the game of capitalism is won by those who save, and lost by those who don’t.
That doesn’t mean you shouldn’t take any risks — because what is life without a little bit of gamble? — it’s more to say that risks can be taken after the savings have already occurred. That’s my current philosophy, anyway. You can take the gambler with no concept of money out of San Bernardino, but you can’t take the San Bernardino out of the gambler with no concept of money. I don’t always practice what I preach. I still succumb to the blackjack hand and roll of the dice on a craps table like anyone else. But whereas I used to do it without any money in the bank, now it’s simply for sport. It’s more entertainment than lifestyle at this stage of the game.
When I was 22 years old there were days that I carried $5,000 cash in my wallet and had to ask a coworker for a $1 bill so I could buy a Coke out of the vending machine. I was making $10.50 per hour and had more money than I knew what to do with. So, naturally, in those instances I would usually buy something relatively expensive, like a MacBook or some shit, and give the rest of it back to the casino that I won it from. I had no business having that much fucking money as a 21 year-old.
Nowadays I feel like I have a decent idea. By saving money, the world can’t take it from me. Casinos can’t take it from me. It’s my money. When I go in on something, whatever it is, I go all-in. So when I gamble I go hard, when I write I write a lot, when I love I love a lot, and when I’m not about you I’m really not about you. Saving money is no different. I started by putting it in my Roth IRA. Then I figured if I’m already doing that then I might as well put some more in my regular savings account. And then I thought, well, shit, if I’m already putting money in both of those places then I might as well take out $200 a week to have in cash. So I’m saving in three different ways. What’s the worst that can happen?
I guess the point of all this is that saving money eliminates a lot of downside in your financial life. Or maybe all I’m saying is that’s been true for me. Again, I would never tell anyone what to do with their money that they earn. Just that I went one way for so long, it didn’t work, and lately I’ve been going the other way, this way, and it has worked. As much as I love to fantasize about dropping $30,000 in cash on a craps game to let everyone know who the big dick at the table is, there is something to be said about walking tall and carrying a big stick while no one notices.