You never really hear people talk about FOMO as it relates to their savings accounts, but you know what? I think more people, especially millennials, should.
Sure, you can be afraid that you’ll miss out on going to that third musical festival this year, or that all of your friends have been to Thailand and you haven’t, but here’s what’s even scarier to me.
Not taking advantage of the only time I’ll ever have the power of 35 to 40 years of compound interest on my side.
Let’s say I want to retire at the classic retirement age of 65. I’m 26 now, which gives me 39 years until that date. Every dollar I save today will have 39 years to grow thanks to compound interest, and if you assume a 7% interest rate, each dollar will turn into $15 by then.
That’s why I’m committed to getting significantly more frugal now. It’s by far the easiest way for me to reach my retirement goals, but it’s also a huge support towards the juggling act of financial goals that is being in your 20s. Sure, this is the most crucial time for retirement savings, but it’s also the lead-up to having kids someday, and maybe buying a house. Both of those things require money, too.
All of this is to say that after running the numbers, I know that my biggest goals (retiring someday, buying a house and having kids) all require some pretty hefty savings, and there’s never going to be a better time to maximize how much I save – especially since my only dependent is our freeloader roommate, Jacob the Dog.
So that’s why I’ve set myself the challenge of saving 50% of my take-home income. The bulk of it will be put into my retirement accounts, but I’ll also be putting money towards three of my other major savings goals: an emergency fund of six months’ living expenses for me, a down payment for a house, and an emergency fund for Jacob the Dog.
I’ll be getting into much more detail about all of this in future posts, so stay tuned! I’ll also be doing month-by-month breakdowns of how it’s going, right down to the penny.