Tales from the Wallet: Wealth Building in Your 20s and 30s

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Protect your moneyThis post is written by your regular friendly blogger Kat, but sponsored by Regions Bank, which features a Women and Wealth initiative to educate, equip and empower women by providing the information and tools that will help to ensure financial success for women.

Ladies, what are your best tips for building wealth in your 20s and 30s? For those of you (most of you) in that age range, what did you do in your 20s you were proud of — and what are your goals for your 30s? At the outset, let's just acknowledge the awesome power of compound interest (these interactive calculators from Regions Bank are pretty cool) — it's why this stuff is so important to get a handle on as early as possible, which I didn't necessarily do. (Pictured.) Some of my best tips are:

1. Get a clear picture of what you have — and what you owe.

If you have student loan debts (or perhaps credit card debts), those debts will obviously play a large role in your financial plan for the next few years. Always pay the minimum, and I strongly advise you to “round up” on the minimum for your debt with the highest interest rate — if your payment on that one is $326 a month, round up to $500 (or $350 — whatever you can do without thinking about it!) and put the extra towards principal. (If you can automate this, it's even better.) When you extinquish that debt, you can snowball your debt payments by moving the $500 you'd been paying to Loan 1 to be an extra payment on top of your minimum for the new “highest interest rate” debt, Loan 2.

In addition to your debt, of course you should track your other accounts if you have several, particularly so you can get an idea of where your money is going. Many banks offer personal financial management tools online, such as Regions MyGreenInsights.

2. Educate yourself on what financial perks your company offers — and how to take advantage of them.

I didn't look into a 401K until I was 28 or so, even though I've been out of college and working since I was 21. A colleague of mine from my early 20s later told me with pride that she had taken advantage of the company match at our first company (where, for example, if you put in $2,000, the company puts in $2,000 too) — and her retirement fund was growing quickly. Talk about a face-palm moment! Even though things were super tight in those early days, I feel like I could have squeezed together an extra $100 a month to put towards the 401K to get the match. Not every company offers a 401K match — and some don't even offer a 401K! — so this is one of those things that varies from company to company. In addition to retirement vehicles, look into flexible spending plans, HSAs, and other perks (like getting subway cards pre-tax) — even if you don't have money to spare, educate yourself so you know what you're rejecting. (Here's our last discussion on company perks, as well as our last discussion on the different kinds of retirement vehicles and whether you can use retirement funds for things like paying for a wedding, buying a house, or going back to school.)

3. Build your emergency fund, and develop a savings mindset.

The emergency fund is hugely important — it lets you do everything from fix a car you didn't expect to die, to quit your job if you really need to. The common wisdom is that you should have 4-6 months of living expenses easily accessible in a bank.

One easy trick that I've used in the past to build an emergency fund is to set up a regular, repeating “automatic transfer” from my checking account into my savings account, after asking myself: can I spare $25 a month? How about $25 a week? The more you can commit to automatically moving from your checking to your savings account, the faster the money grows. In my early 20s, working in magazines, I may not have been able to swing an extra $25 a month — I was already stretched pretty thin, and would occasionally bring a raw potato and a slice of processed cheese with me to work to make a “baked potato” in the office microwave. (I also will freely admit that half of the book lunches and other press events that I went to primarily so I didn't have to think about dinner!) Do what you can.

Another good trick for building your emergency fund is to figure out what 10% of your income is, and break it down on a monthly basis. (So if you make $25,000, $2,500 / 12 = $209 a month.) Treat the $209 as a separate debt payment — pay the minimum every month. Once you fully stock your emergency fund with six months worth of living expenses, you can keep saving 10% of your income, which is a worthy goal in and of itself. (Even now it's on my list of financial goals for the year!)

4. Bonus steps: get aggressive with debt payments, max out your retirement vehicles, and invest in stocks and index funds outside of your retirement accounts.

Once you've stocked your emergency fund, gotten any 401K match that may exist, and can pay your credit card in full every month, you may be wondering, “what next?” There are a few options, that will vary based on what you want to do. My $.02:

  • If you have more than one loan: pay off the one with the highest interest rate and any fees first and pay it off aggressively with any extra money.
  • If you want to go back to school soon: consider setting up a 529 account for yourself — rules vary by states, but the upshot is you can deduct a set amount every year and use it for school expenses like tuition, books, and more. If you end up not getting that degree, you can change the beneficiary (e.g., to your child or your partner).
  • If you don't know what you want:
    • Consider maxing out your 401K or other retirement vehicle, like a Roth IRA.
    • Another option: consider opening your own investment account, such as in an online broker. Unlike retirement accounts, most investment accounts require at least $3,000 to open the account — you can use the automatic saving technique described above to save the minimum in your regular savings account, then move it over when you're ready to invest.
    • Find a financial adviser. For example, a Regions Wealth Advisor can help you determine an appropriate asset allocation strategy based on your personal goals and risk tolerance.

Ladies, what are your top tips for building wealth in your 20s and 30s? What moves did you make that you're proud of — and what do you wish you'd done differently? 

Thank you again to Regions Bank for sponsoring this post; I'm proud to be a part of the Women+Wealth insights campaign. As noted above, note that Regions Wealth Advisors can help you evaluate your situation and build estate plans tailored to your needs and long-term goals with a team of subject-matter experts, as well as the Regions Wealth Assessment.

87 Comments

  1. I’m 29. Things I’m proud of: Never got into credit card debt. I was on a very tight budget but always managed to pay my loans and operate mostly on cash (but used my credit card sparingly to build up a good credit score). I also enrolled into my company’s 401K when I started. Something that has made a huge difference in my (and my husband’s) financial life is refinancing my student loans through SoFi. Before my interest rates were so high that even paying towards the principal barely chipped away. Getting a lower interest rate has been a life-saver. Unfortunately, SoFi most likely wouldn’t have approved me pre-marriage due to my debt/income ratio.

    1. You made so many excellent life choices!

      The student loan refinancing is something I really need help with- the bulk of my 6-figure student loans is at 6.75% interest. I have looked into SoFi, but it did not seem like the rates they offered were that much better (although I understand the impact that 1% less can have over the lifetime of the loan).

      When refinancing with SoFi, don’t you end up losing the income sensitive repayment benefits? Like discharge after 25 (or less) years of payment? Don’t you also lose the ability to put your loans into forbearance/deferment due to economic hardships?

      1. I did not lose the ability for forbearance/deferment with SoFi. Yes, you lose income sensitive repayments but keep in mind that if your loans “discharge” after 25 years, it actually counts as income that year and can really screw you come tax time. My interest rates were 6.5% and 8.5% and now they’re 5.3%, it’s made a HUGE difference. My loans wouldn’t have even been paid off in 25 years before so they would’ve been discharged, and now they’ll be completely paid off in 10 years with SoFi (payments are a bit higher but it’s fine since I can actually see progress). In 10 months I’ve paid off like $8,000 of my loans, with my previous situation it would’ve been like $1-2,000 due to everything going to interest.

      2. I was scared of losing all the benefits gov loans offer. About half of my loans were at 6.8 and the other half at 7.9%, so I only refinanced the 7.9%. Made me feel safer.

  2. In my 30’s now.

    Proud of: Never in credit card debt. Paid off my ~175K in law school loans in about 4 years due to frugal living on a BigLaw salary.

    Would have changed: I LOVE clothes shopping and having lots of options to choose from each morning. But some purchases were definitely made out of “I’m bored and browsing the NM sale section online and therefore finding awesome things I wouldn’t have even thought to want… but now I own them.” I could probably have saved another 15K over the last 10 years by finding a different boredom activity.

    Looking towards: Continuing to beef up retirement savings; hopefully 1-2 kids so socking as much extra as possible away now to mitigate daycare costs.

    1. I guess I am lucky. Dad paid for my schooleing, and I have no school debt’s. I do have a morgage on the coop, which Dad is paying, but I MUST pay the carrying charge’s (maintnance). I also have to pay for all of my own clotheing that the manageing partner does NOT consider workrelated, and I must pay my own credit card bills and for all of the food that I buy, includeing restrunt food.

      Dad take’s care of my finance’s and taxes and I sign everything he tells me to for my 401K and partnership stuff. I need Dad to keep me honest and NOT spend to much and he does CUT OFF my credit cards when he sees the bills are to high. He wants me to get married so that another man can take over for him, b/c Ed does it for Rosa, but I have no man to do it and Sheketovits was to incompetent to do it any way, Dad says.

      So the lesson is, try and find some one smart to handel your finance’s, like my Dad. I hope he does not make me marry some Schlub just b/c he is a CPA. FOOEY on that!

  3. I don’t have debts and I save aggressively, but I do regret not having maxed out my 401k and therefore my tax savings in my 20s. When I was 25, putting money into a place where I won’t see it again until I’m 60 wasn’t exactly appealing. So I opted for outside investment. Now in my 30s, that distance is shorter and seems to only be shrinking faster (time sure flies past college) that I feel more compelled to squirrel money that way.

  4. Proud of: never having credit card debt, maxing my 401k, on track to pay off 130k of student loan debt in 7 years.

    Not so proud of: lack of emergency fund savings, not having a detailed budget, never living with roommates after law school (I should have done it even if only for a year).

  5. I’m 31.

    Proud of: Never having consumer debt. Paying off $40k in loans and saving about $250k in five years of HCOL area Big Law thanks to living like a student and not upgrading my lifestyle except for certain things that are necessary for someone working 75+ hours a week (e.g., a cleaning service). The fact that both my husband and I are now saving the IRS max in retirement, while very aggressively paying down our mortgage and we will probably be debt free with sizable retirement savings by 35.

    Would change: Putting more money into retirement earlier (I didn’t start until I left Big Law at age 30 because we had no 401k match). Less spending on “stuff,” especially clothes, when I was in college/law school.

  6. I’m 28
    Proud of: no credit card debt, paid off my student loans in 6 months, opened an IRA when I was 18. I’m very lucky to have parents who taught me about finances

    Not so proud of: ~Two years ago, I rented an apartment that was a little too far outside my budget because I was approved for a raise…but no one told me that the raise would not go into effect for ~9 months or so. This was super foolish on my part. I also was in a new relationship and wasn’t honest with my boyfriend about what I could afford (I was very eager to go dutch or treat him to stuff). I have remedied both of these things and am working pretty hard on saving money.

  7. Proud of: took out only the bare minimum for law school (which was still a LOT); didn’t get a “fancy” apartment like a lot of my friends in and immediately after law school; never carried a balance on my CC.

    Not so much: should have started contributing more to retirement and earlier (I started with 3%, went to 7% and should probably do 10% but still haven’t); didn’t deal with student loans aggressively; had the chance and didn’t try to buy earlier an apartment because the only things I could afford were small and would have been more than my rent but prices have increased so much in the last few years that I would be in a much stronger position to buy a more long-term home now.

    1. I should also add to the “not” column that I still haven’t done any investing other than through my 401k and so that’s another lost opportunity. I think I am very cautious by nature and I generally have zero interest in money beyond just wanting to not think about it so it ends up that I manage fine enough and don’t get into trouble (b/c cautious) but I also forego most opportunities for reward (b/c hate dealing with money). I often hear posters here talk about their favorite investing or budgeting blogs/books/podcasts and I just can’t relate at all.

      1. I don’t think I’d worry about it. My personal view was that I’d try to max out my 401k every year before investing separately from that.

      2. This is also my fail. I didn’t know anything about stocks/markets growing up because my parents never had such things, and so I let a sizeable nest egg grow through my early years in biglaw, after paying back almost $100k in loans, in a stupid savings account because I thought that was the smart thing, saving money. But rich people don’t use savings accounts. They invest in stocks, bonds, funds, or property. My ignorant self could have afforded a down payment on a very modest condo during the market collapse, paid a mortgage instead of rent, and made a 25%++ return flipping it after a few years. Or bought good stocks with a steady, modest increase instead of a stupid savings account. But nope.

        1. in the same boat. any posters have advice on where to start for those of us that are cautious/overly anxious about investing money and not having it in your bank account?

          1. Yup, I’d put your money in one of the two big roboadvisers — Betterment or Wealthfront. They invest your money in very low-cost ETFs and they tweak your asset allocation for you over time. They also do tax loss harvesting which especially saves you money if you’re in a higher tax bracket.

            I work in the asset management industry, and my personal money is with Betterment…

          2. Open a Vanguard brokerage account and invest in their low-fee index funds. My brother trades stocks but I don’t keep up enough with individual companies to do that. I just buy S&P 500, Mid cap, Low cap, and something international like All World, and let the market do its thing. I don’t aspire to beat the market. I just want to keep up with the market.

  8. I’m in my early 30s.
    Proud of: started a Roth IRA when I was 19. Completed college while serving in the military, earning a salary, gaining work experience and having tuition paid. Best decision (for me) ever. Invested early and often outside of retirement accounts. Contributed to 401k for full match my entire private sector career, and have maxed contributions for the last 5 years. Debt free aside from mortgage (VA loan allowed us to buy without the gigantic down payment we would have otherwise needed in our hcola, another win for military service) and car, both at extremely low interest rates. And I have excellent credit thanks to putting everything on CC and paying it in full every month.

    Not proud of: I don’t budget, and could probably save thousands of dollars a year if I were more cognizant of my spending. My cash emergency fund is nowhere near where it should be (although I could liquidate investments if necessary). I have done no estate planning, despite saying that I ought to for … years. Which is especially bad since I have kids. And also on the kids note, I haven’t saved anything for their college education yet. The oldest is 4, so I have time, and plan to start once childcare costs are finished, but if I budgeted I probably could find a bit of money sooner.

    On balance, I think I made better financial choices in my 20s than my 30s. My income and expenses have also both increased massively in the last 10 years, and somehow the bigger numbers make it seem more overwhelming (also I have way less energy to think about $$ because kids and full time job).

  9. Besides the obvious big wins, also look for the medium wins – which often may be side benefits from work. When in an industry where this is a perk, get comfortable expensing the things you are allowed to. I was surprised by how reticent I and several of my fellow fresh-out-of-undergrad consultants were to expenses dinners and cabs and things. Once I got over that, it saved me a TON of money, especially since takeout meals were often large enough that 1 dinner order was actually 1 dinner + 1 lunch for me. I basically never bought groceries (though there were definitely weeks where I would have preferred the work-life balance that would have necessitated that…) and also tended to get healthier meals since I didn’t have to worry about buying expensive produce at the grocery store that then went bad before I could eat it.

    Another win – I paid for a year of gym memberships before really convincing myself that all I used was the same equipment that was in the free gym in my office building. Quitting a medium-price gym saved me ~1k savings per year.

    These sound small, but definitely helped in those early years.

    Wish I’d done differently: lower cost apartment. That alone would have made a huge difference and I spent little enough time in it that it was a waste of money.

  10. I’m 37.

    Proud of: have $1.3 M in savings (investments, cash, bonds, etc). Only able to manage this because I had no law school debt and very little undergrad debt (scholarships to both)

    Not so much: not saved as much in the last two years due to not budgeting, spending more on clothes than I should, and adding another child to the mix

    Immediate goal: stick to family budget and sock away more in savings

  11. I wish I had started putting money into my 401K in my first job post college instead of buying a new car. This was in 2008-09 though so I kept hearing about people losing 75% of their retirement savings overnight and was scared to do that. I’m proud of paying off all of my and SO’s student loans 4 year post law school graduation, although it certainly helps that my law school loans weren’t outrageous thanks to parental contributions. I’m grateful to have had my parents as examples of financial frugality.

  12. Proud of: Getting out of credit card and car debt, signing up for the 401K and my first post-college job when I was 21, paying extra on my student loans nearly every month, religiously tracking my spending for over 4 years, starting a Roth IRA while working as a temp without 401K options, contributing 6% to my Roth 401K (and getting 6% from my firm).

    Wish I’d done differently: Not get into credit card debt in the first place, lived in a cheaper apartment post-college, applied for more law school scholarships and taken out fewer loans, not emptied that early 401K to cover expenses while working a legal internship.

    My current focus is paying down my student loans. I need to work on sticking closer to my budget so that I can throw even more at my loans. I’m comfortable with my emergency fund now so I’m throwing the money I was adding to the emergency fund every month to my loans.

  13. I am 31.

    Proud of: going to my 3rd choice college because they offered me a scholarship so I could graduate without debt (thank you, 17 year old me, for making a mature decision!), maxing out my 401(k) the past few years, pretty good savings / emergency fund, good credit score due to judicious use of credit cards.

    Not proud of: a tendency toward impulse buys / boredom shopping, poor tracking of business expenses, leasing expensive cars which I can afford but are totally unnecessary. I could probably save a few thousand additional dollars each year if I addressed those. Also, my determination to live in a fancy part of LA means that I’ll be renting for a long time; I might be able to afford a house elsewhere in the city; sometimes I feel guilty about that.

  14. All of Kat’s comments are good advice. I would add the following:
    1) If you get married and combine finances, make certain that both spouses are listed as principals on the credit card accounts so that both will build up a strong credit score. When we first got married, I canceled my credit cards and added my name to my husband’s cards. Little did I realize that I had the status of a child. Thankfully, my then-boss explained the difference to me and we rectified the situation.
    2) Keep expenses low. We were very frugal in the early years of my career (my husband was a student). There are lots of ways to keep spending down: we really limited restaurant eating; I got my hair cut very cheaply at the “cutting class” at a fancy salon, etc.
    3) Pay back family loans. We borrowed money from a family member for our first house, and I am really proud that we paid it back quickly. It made us feel good, it eliminated any stress about it, and it meant that we were able to ask for help again when we bought out second house.

    1. To your first item, I would actually say you’re better off not closing CC accounts, esp. ones you have had for a long time.

  15. I really like this post and reading insight from you guys! I currently have one credit card, no student debt (i went to a state school and parents paid for it plus I worked). I’m a little over 24 and wondering if its smart to get another credit card for the extra perks, travel rewards, etc. However, I’ll be going to grad school next year (for the next two – four years) and wont be making too much money while in school.

    I was raised with the mentality to try to have as little debt as possible and i got my credit card only 2 years ago. Would it be wise to get another credit card now or should I wait until i get my grad degree and will be making more money?

    1. Also I only got the credit card i have now to build credit and barely use it – mostly on sushi and a random purchases under $75 a month total

      1. I think it’s good to do it if you trust yourself not to carry a balance. I have two credit cards and find that useful for the different perks, etc. But I am not sure how much you’ll be taking advantage of the perks now if you are not going to be using it a ton and some CC companies will just close your account due to inactivity if you don’t use it at all and that can be a ding on your credit report.

    2. So, if you travel, I would recommend having two credit cards in case something happens to the first one. I would also suggest using one for online purchases and one for offline purchases.

      1. Or, if one gets dinged for fraudulent activity and the number gets shut off, but you still want a card to cover while the new card number is getting issued. I actually try to divy up my cards between the one I use in person and the one I use online, so those are different.

    3. I’d get a second one if only because of the rampant fraud. I used to have only one and it was annoying not having access every time it got compromised. My new one has much better rewards than the old one and it’s the only one I use now. I charge something on the old one occasionally just to keep it active.

    4. If you’re going to be paying your grad school tuition with a credit card, I would DEFINITELY recommend getting a rewards card. You’ll more than meet the initial spending requirement that gives you bonus point (usually $2-5K depending on the card) with your first tuition payment. I’ve been doing that since I’m in school part-time and have been RACKING up points!

  16. Proud of: graduating from undergrad and grad school with no debt; paying my credit card balance in full every month; saving for retirement; buying my first home in my early 20’s

    Not proud of: spending A LOT on clothes, jewelry, makeup, et cetera

  17. I’m 33
    Proud of: Buying a house in a HCOL area, being on track to pay off my loans this December after 6 years in BigLaw, saving up a reasonable emergency fund

    Would have changed: Not having stronger retirement savings and not trying harder to save money for retirement during first job and during law school.

    Need to change/next goal: Excessive spending on convenience food but its hard working 60+ hours a week and still trying to have some semblance of a life outside of work. This money could be re-purposed for more retirement savings or more vacation savings. Both things that are much more important to me than convenience food.

    1. What worked for me on convenience food is to not cut it all but to pick a couple things to change – like I keep coffee and breakfast food (yogurt/cereal) at the office and eat breakfast when I arrive. I still buy lunch a lot but at least it’s one meal a day instead of two.

      1. A big +1 to this. I find that it’s way easier to eat coffee and a decently healthy breakfast (yogurt, fruit, cereal, whole grain toast, pre-made egg cups) at home or on the go than it is to find a healthy, tasty, fast lunch. I splurge on lunch and save on breakfast.

    2. I stopped eating out at lunch after realizing that $8 a day adds up, plus I checked out the nutrition calculator online and was appalled at how much sodium is in so much restaurant food.

      So now, some days I take a sandwich with cheese, sliced tomato, and some avocado. I’ll add a greek yoghurt and maybe a fruit and call it a meal. I’m not going to win any awards on creativity but I have lost weight and certainly saved some money. I guess what I am saying is, you don’t need to find the time to cook to bring lunch. Just have some sandwich stuff on hand at home (even just PB&J some days).

      1. Maybe this is just me but when I was working 60-90 hrs/wk in biglaw, I was NOT going to feel good about pinching pennies and eating a cheese and tomato sandwich out of a brown bag like I did in high school. I always say — I am not working this hard to deprive myself. I don’t take it to extremes — no luxury cars or 5 star vacations or anything – but food?!

        1. I worked in a law firm with someone who made six figures and ate PB&J for three meals a day, every day because he was trying to save money and pay down his loans aggressively. I consider myself a huge saver and wouldn’t take out a loan for anything except education or the purchase of a home (and even then would buy a lot less than what the bank tells me I can “afford”), but even I thought that was insane. There is a point at which you have to sacrifice savings so you have a decent quality of life.

      2. So I think that sandwich sounds good and don’t get the shade throwing here. I almost never buy lunch, because 1) expensive and 2) most options are unhealthy. That said I don’t eat at my desk either — that part IS depressing for me. I go to a park to eat, either to meet friends or to read a book for a few minutes to decompress.

        Other things I like to eat for lunch: hummus and veggies; egg salad sandwiches; some kind of lentil dish, prepared in bulk and put into lunch-sized containers for grab-n-go. I usually add a piece of fruit of some kind too. I think I’ll add your egg, tomato, and avocado to the rotation! Maybe with alfalfa sprouts if I can find them (my grocery store doesn’t always have them).

        1. It’s not shade when people say they don’t like something. See Shade Court on Jezebel.

    3. I do drink office coffee and bring instant oatmeal/fruit/yogurt I bring from home at work for breakfast. Its more the lunches out and take out dinner combined with a nice meal out once a week that adds up. I think between my husband and I we probably spend $1500+ on food a month, which breaks down roughly as:

      $200 on groceries for breakfast and other items like fruit and the odd meal I cook or food for if we have guests over
      $350-$400 on lunch between the two of us — $8-10 a lunch 5 days a week for two people
      $400-600 – 4 nice meals out a month in a HCOL city (we go out with friends, try new places, and typically public transit to the location and take a cab home if we drink)
      $300-$500 – on takeout

      I enjoy the nice meal out once a week (and when we are busy it probably isn’t that often) but I wish I could get my act together to cook dinner/bring leftovers at least some of the time because lunch and dinner between us is nearly a $1000 a month. Groceries would be so much cheaper.

      1. I agree with the poster above that packing a lunch for work doesn’t have to be that fancy, at all. I eat sandwiches very similar to hers pretty often and love them. I also really like putting leftover protein from dinner the night before onto a big bed or arugula and/or spinach with a few other veggies, it makes for a really filling and yummy salad. I found this article helpful for figuring out work lunches: http://www.bonappetit.com/test-kitchen/cooking-tips/article/lunch-al-desko.

      2. I’d start by aiming to cook dinner one evening a week and make enough for you both to take leftovers for lunch the next day – pasta with a jar of pesto + chicken (use one of those panini press grills) is easy. Or when you do order takeout – order enough to take some leftovers for lunch the next day – will probably be less than each buying lunch food separately.

  18. I’m 32 now.

    Proud of: Going to the state college where I got a full(tuition)-ride so had little undergrad loans, paying off my credit card debt btw college and law school, buying a home with 20% down when 29 that locked in my housing costs at little more than I was paying for rent at the time (and less than I would be now), and on track to pay off my law school loans by the end of the year because I’ve lived a comfortable (but not extravagate life) when in biglaw

    Not proud of: Only putting 3% into my 401K for my first few years in biglaw (but then bumped it up to the match and fully funding a backdoor roth) and letting financial concerns impact many of my decisions (I should have gone out to dinner with friends more in college and law school)

    Question: once I pay off my law school loans at the end of the year, I’ll have about $6-7K a month to save. Any recommendations for books or fee-based financial planers in DC, as I try to figure out what to do with that money? I want to have kids (and may do so alone if I don’t met the right person), so my current thinking is that I would like to save it somewhere that I could either use it for retirement or for my kid’s college expenses (or daycare, if absolutely necessary) since I expect my income will go down shortly once I leave biglaw

    1. Skyler Heimark at Raymond James does fee-based financial planning and is AWESOME. She’s an excellent listener, and is an incredibly thorough planner. I’m in the financial industry, and I use her for fee-based planning even though I already know what I’m doing with respect to investments. It’s just really helpful to be able to talk through my goals with a third party who will help me put together a plan and then have hold me to it.

    2. My comment is in moderation for some reason. I highly recommend Skyler Heimark at Raymond James for fee-based planning. More details in my moderated comment!

  19. I’m 39. I was not especially savvy or responsible in my 20s. I had a good job out of college and I saved some money. I put some in CDs and some in the stock market. I did not save for retirement. Then I went to law school and basically operated on a shoestring.

    In my 30s I started saving aggressively for retirement, purchased real estate, opened 529 plans for my kids when they were born, and invested in index funds. I also stockpiled cash, which I used to remodel the first house and as a down payment on my second house.

    In retrospect, I wish I had started saving for retirement sooner. No one in my family ever did and I did not realize I should have been.

  20. Early 30s… Proud of: Staying in our cheap apartment for 3 years after law school, while all our friends lived in nicer ones in a hipper (but no safer) part of town. We saved $500-1000/mo by doing this, and quickly built up a down payment. Also, I always save immediately after getting paid. I have an auto transfer set up for savings accounts (emergency, fun, house) that draws out the day after I’m paid. I never see the money in my checking, so I have to budget accordingly.

    Not so much: I don’t max out my 401k, but my husband does and I contribute enough to get the full match. I also don’t budget — I rely on auto savings to drive my budget. I’m sure I could squeeze a bit more out if I truly budgeted.

    Would change from my 20s: I started buying nicer clothing that I like more in my late 20s. Before that, I bought on sale stuff that I liked, but never allowed myself to buy the $200 dress I loved. I also would buy too much random stuff without giving much thought as to whether it filled a gap in my wardrobe. I overspent on clothes without ever really feeling satisfied with what I bought. Now I exclusively buy only what I love and shop with more purpose and forethought. My wardrobe is smaller, but getting ready is easier because I love almost everything in my closet.

  21. Question on 401ks. Does your employer automatically stop funding the 401k when you reach the max?Does the 401k match also come out of your bonus? If you go over the cap, what can you do? Do you just pay taxes on the amount over the max at your federal tax rate?

    1. Yes. If you reach 18k contributions say in October – your employer will stop deducting from your paychecks so you won’t be going over 18k — at least that has been true everywhere I’ve ever worked. I’ve never seen or heard of a 401k match coming out of a bonus — it’s an additional perk. If you go over the cap (which happens often if people switch jobs mid yr), you pay taxes on the amount put in over 18k.

      1. Whether it comes out of the bonus or not probably depends on the way your payroll system is set up. That would be a question for HR or Payroll department. I’m not in law, but I think I did have non-tax deductions from my bonus check – I can’t remember if it was both 401k and stock purpose plan (but at least one), but it did not include the health care, HSA, dental, etc. deductions.

    2. Only worked at 2 companies- but both took 401k out of bonus. They did notify people in advance so you could change your contribution right before the bonus to avoid this.

      1. We change our 401k contributions right before the bonus so a bunch of it goes to fund the 401k first.

  22. Proud of: started maxing out the 401k to 18k starting day 1 of my job post-law school. Started investing outside of retirement accounts at age 28.

    Not proud of: laid off and w/o work for 18 months so no retirement savings then (not that I wanted to be laid off); wasn’t even financially saavy enough to know about IRAs so I put in nothing for retirement during my clerkship yr (as you’re not eligible for the TSP as a clerk) when I could have put in 5.5k; age 36 and I still can’t commit to a house so no equity being built.

  23. About a year ago (or maybe two years ago at this point) there was an interesting comment thread where people posted their total income, savings, debt, etc. I can’t find it now and was wondering if anyone saved it and could repost here? Would be relevant to this discussion.

  24. I’m single and 35.

    Proud of:
    – Paying off my entire law school debt ($170k) on less than a Biglaw salary.
    – Current $1.2M net worth.
    – Owning a small house in a HCOL area.
    – Buying my parents a house for cash. They will pay me back when they sell their old house, but I’m proud that I was able to help them.

    Would change:
    – No 401k saving until 30, but I was focused on paying off debt and general saving in case I lost my job.
    – Buying too many clothes on sale. I have a closet of junky stuff I don’t want to wear. I’m going to spend some cash in the next 3-6 months to fix this and sell/donate most of my current stuff which really isn’t appropriate to my age or professional status.
    – Generally buying stuff in the last 2-3 years that I didn’t need…after many years of living very frugally, I went a little overboard on the “treat yo’self” mentality. I need to come back to a budget.
    – Waited too long to buy because I was afraid of buying alone.

    1. How awesome that you were able to buy a home for your parents! That’s amazing.

    2. Oops *36

      Also, I tried posting earlier to the daily thread: I want to send my heartfelt thanks to the many ladies who offered thoughts and guidance to me in yesterday’s afternoon thread, from the most compassionate to the tough love. I am going to read your replies many times over this weekend. I have a somewhat toxic “situation” with an unavailable man that has been dragging me down for about 6 months and I think your advice may be what I needed to break things off with him and spend some time focusing on myself.

      Anyway, thank you all again for knocking me upside the head. I love this community.

      Oh and for the woman who asked: my mom was diagnosed because she knew that something wasn’t right and insisted on seeing doctors. Also she was just acting strangely and recklessly – spending $90k on a single credit card in 2014 (more than my parents make in a year). She is still in denial about her condition, which doesn’t help.

      1. Hugs. You are doing so much right and have so much going for you. I know it doesn’t seem that way right now, but you have so much financial flexibility. Remove this toxic guy from your life stat- you got too much fabulous to explore to have time for that nonsense!

  25. I’m 29

    Proud of:
    -Getting a credit card early and using it wisely over a decade, have a great credit score as a result.
    -Working every year through college. Graduating from college when my divorcing parents unexpectedly pulled the rug out from under me financially (both refusing to cosign loans). Graduated early with minimal debt.
    -Working through graduate school and getting a master’s with zero debt.
    -Fully funding my 401k for each year I was working (started at 22) including during and after graduate school.

    Would change:
    -Wish I had Passed on some dinners or drinks out and invested that money. I don’t have any investment accounts other than my 401k.
    -Have a stronger emergency fund
    -Would like to work on having a less emotional relationship with money – it’s super stressful for me and always on my mind.

  26. I’m 27,

    Proud of : crossed 75K in savings. +401K has ~20K.

    Not so much: accepted a job that paid below market. Did not negotiate as well as i should have. Stayed in that job too long.

  27. I’m 32.

    Proud of:
    – Buying a triplex where the rent we collect covers the maintenance, escrow, and interest (everything but the principal). Living in a smaller apartment than we’d really like to do this.
    – Having healthy amounts in retirement accounts.

    Would change:
    – Buying a new “family” car after we had our son. Our 11-year-old car died on a road trip, but we should have bought a used car that we could afford with cash, and car payments (even low interest ones) stink.
    – Spending too much money on lunches, lazy dinners out, etc. pre-kids. Now that we can’t go out to eat without planning and hiring a babysitter, we’ve come up with plenty of lazy dinners in.
    – Buying books. I’ve recently discovered our public library, and now I feel so dumb for having purchased books that were just sitting on shelves or were available to read on my Kindle for free. Why doesn’t everyone use the library? Granted, the financial impact of this was small because I didn’t have that much time to read until recently, but still.

    1. BUYING BOOKS!!! Absolutely agree with you on this. I can search and reserve what I want at my desk at work, and pick it up at the library on my way home. Just run in and ask for it at the desk!

      Another bonus – I don’t have a bunch of books I read but didn’t love clogging up my house.

  28. I’m 28

    Proud of
    – Responsibly using a credit card. I like to travel, so I have a miles card, treat it as a debit card and pay it off every month.
    – Savings. When I graduated from undergrad, I was temping, making so little money, that after buying gas to commute, I was in the red and living off my savings. I temped for two years. The day I was offered my first permanent job, making $38k annually, I had about $500 in the bank and was unsure how I was going to pay that month’s loan payments. Fast forward to today, between my every day savings, emergency savings account and my 401k , I have almost $40k socked away.
    -Speaking of my 401k, I have it set to automatically increase my contributions by 1% every year and, even without social security, living on a percentage of today’s income, I will have a small surplus of money every month.
    – My car will be paid off next year after 3 years.

    Cons:
    – I should be more diligent about budgeting. I got a huge (to me) raise with my last promotion and have been less vigilant
    -I know I need to pay my student loans more aggressively, but I have heebie jeebies about not saving as aggressively as I am right now.

  29. I’m 33

    Proud of:
    Less than 3K in student loans from undergrad (interest is so low 1ish% so not worth paying off) early
    Home in HCOL for which my husband and I pay double the mortgage every month
    300K+ in 401K – I have been putting in enough to get the maximum match from my company for the last 11 years
    Have supported family (2 parents/2 siblings) for past 15 years on average of 25K+ a year expenses for them
    Lived cheaply – love to cook so I rarely eat out. I don’t eat out for convenience but will eat out with friends and family, don’t spend much money on things I consider luxuries (manis/pedis/massages etc)
    Bought used cars in cash (never over 7K) and drive them till they die
    Good amount of traveling on the cheap

    I was lucky to learn what I truly value early on from having grown up in a family without much money so it saved me from making a lot of bad mistakes.

    Would change: Boredom shopping, bought too many things just cause they were on sale or clearance.

  30. I feel like the things I am proud of are not financial.

    I am 28 and married, although my husband is a graduate student.
    1. Paid for my wedding and honeymoon with my savings as a first year associate — probably something like $70,000.
    2. Will finish paying my six-figure debt from law school this year — after 3.5 years in biglaw and 1 year clerking.
    3. I have $40,000 in my 401k.

    Not proud of, but maybe wouldn’t change:
    1. Taking great vacations and eating out with my friends.
    2. Having a nice apartment that I love.
    3. Buying clothes I like.

    1. Ha, I didn’t see this until I after I posted below. I’m jealous of your not-proud-of-but-wouldn’t-change! Sounds like you did everything right!

  31. I’m 28. I think I have a bit of a different perspective than most here.

    Proud that I worked when I was in high school and college to have spending money, never had CC debt, paid off student loans quickly, and bought a house that I love in a HCOL area.

    I promise this isn’t a humble brag, but if I’m being very honest, I’d actually re-do my early-to-mid 20’s trying less hard to bend over backwards to save money. Part of this is because a lot of those efforts were pennywise but pound foolish – things like buying clothes on final sale because they were cheap but I didn’t end up liking/wearing them. But part of it is because in retrospect, I would have rather spent another year paying off loans than being miserable/missing out on great experiences. I lived with a terrible roommate who made me hate being home during my first year of biglaw. I walked many blocks when it was freezing or raining because I didn’t want to pay for a cab. I missed out on some amazing vacations with friends and didn’t visit my family as often as I should have.

    I wouldn’t have had to go into further debt to avoid/do any of these things, and I don’t think it would have really impacted my life in the long run if I didn’t pay down my student loan debt quite as fast (3 years). It was all psychological – I had to support myself starting at age 18 and I was terrified of not being able to. So although I’m happy now (and a little more relaxed about money), I still regret those years of being so frugal.

    1. I get what you’re saying. Spent 9 yrs in biglaw and was pretty frugal (for biglaw – even clipped coupons at the beginning which I didn’t see any associate pals doing). But I’m glad the one thing I drew the line on was NOT refusing to travel for my family. Meaning if there was a family wedding in Tulsa and the LGA to Tulsa flight would cost me $900 plus hotels, I was going.

      In a govt job now where I make less (but more than I started off making in biglaw in 2005) and yet I still try to hold this line.

    2. I hear you. There were many years when I probably spent a total of $200 annually on clothes. Like, I would go months without buying anything. And when I would spend, it was always at Ross and Marshalls and not everything fit well, but hey — it was cheap. I spend a lot more now but really love my clothes and enjoy wearing them and look good.

    3. Completely relate to being frugal. The first time I ever bought something at Nordstrom, I was 28 and just finished law school. There was this gorgeous Classiques red boucle skirt that I had my eye on, but $96! That seemed like a fortune to me at the time. I did buy it and ended up wearing it so much. That opened my eyes to the realization that it is better to buy nicer things and take care of them than fast fashion.

    4. Hear you on the miserable roommates in order to save money. The stupid thing was I could have found a roommate that wasn’t so miserable at the same $450/mo rent. I know, because I did. But I was so caught up in pride at my own frugality that I refused to move.

  32. Proud of: getting into and doing the legwork to take advantage of credit card bonuses, etc. Part of this was by having cash savings, certain amounts of free time, and a good credit score, but the travel experiences I am able to have with my family and partner at a fraction of the cost makes me really happy. (Ex. going to Hong Kong and Japan in over CNY with my parents in business/first).

    I’m also proud of being able to grow my career and salary as a new grad from 2013-2016, I went from 0 to 65k over 4 different jobs. I consistently saved 10-15% of my salary in a 401k/IRA and I lived at or below my means when I was making very little money and living in DC.

    I’m not proud of: the feeling now where I get hit with a small fee or I want to buy a doodad and I’m like it’s okay I can buy it now. I have to actively force myself to call to get the fee refunded or just walk past the thing. Also, my partner laughs at me for my bougie taste, but I was raised to see and appreciate quality in things, and be willing to pay for it (if I can).

    What I would have changed: MY COLLEGE MAJOR. I do not use it now, and I got a separate completely unrelated certificate after I graduated to get a better job. I would have gone into compsci, and gotten into a 75k entry level job (normal for my area), and be hitting 6 figures next year (I jest, but I dream).

  33. I’m 31.

    I’m proud of almost maxing out my 401k this year for the first time. I’m especially proud that I have more than tripled my income in the 6 years I’ve been working. In this past year I switched jobs to a job that paid me about a 50% increase in salary and I’m proud I made that happen and advocated for myself and believe that I had the skills that were worth that amount. No women in my family or friend group have made six figures and it may be shallow but I’m so so proud that I broke that barrier. I also bought property on my own and was the first woman in my family to do that.

    Things I’d change: I waited a few working years to start funding my 401k. I was more comfortable with outside investments so I put my money there but didn’t get the tax advantages. I wish I’d chosen a cheaper college even if it was “less prestigious” because in the end I didn’t wind up loving the school I went to, and it hasn’t mattered at all in my career. I’m still working on spending money on “stuff” that I don’t need and sometimes don’t even particularly want.

  34. 28, live in moderate cost of living area.

    proud of: homeowner, currently maxing out my 401k, making my standard 10 year payments on 150k of student debt, $30k emergency fund

    not proud of: not maxing out my 401k my first two years of working, and not investing my money (other than in my 401k). My emergency fund is way more than I need for 6 months of living, and I know I need to hire an adviser to figure out what to do with it, but am just paranoid of losing money and not having it easily accessible. Also need to figure out a plan- I already own a home so am constantly debating whether I should continue saving for future wedding/kids or aggressively pay off my student debt.

  35. I’m 33.

    Proud of:
    Going to state school for undergrad on a full scholarship so that I wouldn’t have any debt.
    Working full-time while going to law school at night to minimize law school loans.
    Paying off my law school loans in 3 years.
    Maxing out my 401(k) for the past 6 years.
    Living car-free!
    Living in small, dumpy apartments to save up for the awesome place I have now.
    Deciding to buy an awesome place that was at the low end of my price range so I could continue to save aggressively.

    Would have done differently:
    Saved more aggressively in my late 20s.
    Bought less clothes.
    Spent less money on going out. My food/alcohol expenditures have gotten absurd.

  36. 26.

    Proud of:
    Starting paying into a pension aged 21.
    Student loan will be paid off by the time I am 27.
    Didn’t get a credit card til I was out of uni and could afford it.

    Not proud of;
    Not saving straight out of university – I could have purchased a home by now rather then that likely happening in 12-18 months time.

  37. 34.

    Proud of:
    My husband and I both max out on our retirement (first time ever was last year – feels great!).
    Paid off law school with help of family.
    Bought a nice house in a HCOL area.
    Allowed myself to buy my first (and probably last) new car. I haven’t felt safe in years, and now I do. NO regrets on the price tag.
    Opened 529s for both of my small children (my 3 year old has more $ saved already than I did at 18)

    Not proud of/worried about:
    Providing for my parents. Any tips on this? Raised by a single mom with no assets. She is absolutely wonderful and I want to provide for her, but don’t know the best strategies to save (she’s 65, no health issues).
    Not enough outside savings. Too scared to start.

  38. I’m proud that I paid off my student loans ($13K at 9% interest, which doesn’t seem like a lot now but my first job out of college paid only $20K) early. I started participating in my employer’s matching plan as soon as I could, but my biggest mistake with that was allocating almost all the money to a fixed return fund of like 2%. For dumb. In your 20s and 30s is when they say you can invest the most aggressively. That fund would be worth a lot more now if I had made wiser investment decisions.

  39. Has someone said you MUST be careful how you pay extra on your student loans!?! Bc it REALLY matters and I don’t think Kat mentions it. Most companies will treat payment over your current amount due as advance payments of interest – you have to make them apply it to your principal. Don’t just paying extra and expect the money to reduce the principal – call and speak to your lender / services (or just refi with Sofi and get treated decently – yeah Sofi!)

  40. 30, single

    Proud of: Paid off $48k in student loans from undergrad and paid cash for grad school while working through both academic programs. Funded 401k at least to full match (and often beyond) beginning when I was 22 – the balance is ~115% of my annual salary and growing exponentially since I shed the loans. Bought a good used car outright in 2008 and haven’t upgraded it yet (still works fine and I don’t need to use it much in the city). Maxing out my HSA to save for future medical expenses and reduce current taxable income. I have excellent credit and an emergency fund that can easily cover 6 months of living expenses. I’m able to take or send my parents on vacation periodically and can comfortably travel internationally – which means I can make it to all family events.

    Want to change/next goals: Continued saving toward a down payment in a top 5 HCOL U.S. city. Continued HSA and other saving for egg cryopreservation since it’s not covered by insurance as an optional procedure. Letting convenience food/Uber be too high a line item in my monthly expenses. It would be better to redirect the money into savings or even toward a trip, but it’s hard to balance when working long hours.

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