Although it isn’t inherently associated with finances, stress often times arises from dealing with your personal financial issues, regardless of if you’re in a good financial situation or not.

In regards to finance, there are (in my opinion) good forms of stress and bad forms of stress. Most people tend to only see the bad forms of stress - this stress often discourages them from even dealing with their finances, which is a place that you don’t want to be - and a place I’ll touch on later this week. What causes stress? Things called stressors are basically the things in ones life that influence the level and frequency of stress. In order to manage stress, it’s important to manage these stressors effectively - and in order to do that, they must be identified.

Things that stress people out negatively vary drastically from person to person. If I were standing in a crowd, the person to my right might be fine with having credit card debt and paying relatively high interest rates on the cards, while the person to my right may think that credit cards are the worst thing available, and I lie somewhere in the middle. Something that doesn’t stress out one person is causing some people to rip out their hair. Because of the dynamic nature of stressors amongst a large group of people, everybody has to identify what they personally get stressed about. Credit card debts, working 9-5 for ‘the man’, whatever; write down anything that causes stress and is somehow related to finances. My big one is working 35 hours for ‘the man’ for close to minimum wage and feeling like I’m not making any progress. Being a college student, it’s something that I’ve been conditioned to live with, but I’m not satisfied with mediocrity.

Once you have a list compiled, arrange them by how simple they are to solve. Working 9-5 for somebody else, for example, probably ranks pretty low on the list - it’s quite difficult for most people to quit their job and still maintain their standard of living. On the other hand, if something that causes you stress is your credit card bills - or just managing your spending - chances are it’s easier to solve problems like this. Once you have the list arrange, start at the top and work your way down, eliminating them completely or figuring out a way to deal with them.  If your credit card bills are causing you a headache month after month, start paying down more to get rid of the debt quicker. Cut expenses (something I’ll get into later) if you don’t have the extra cash easily. If you’re like me and don’t want to be stuck in a 9-5 for 40+ years, find something that you like to do and learn how to make money from it; you won’t be sick of doing it and it’ll help you accomplish your goals.  The important thing to know is that when you’re tackling this list, it’s simply going to be impossible to knock off all of these peeves, at least quickly. Patience is a must, as is persistence. If you continue to make small changes that will help reduce your stress, you will be happily surprised over time.

Eliminating all stress isn’t necessarily a good thing, at least not for all people. It depends on how you operate, but I personally thrive off some level of stress. I’m a full-time college student and a full-time employee for a retail electronics store. I have about two hours each day where I can manage to sit down and relax, but it’s this hustle and bustle that keeps me going. Good stressors in my life, when it comes to my finances, include working full time. Being employed keeps me active and, I hate to say it, provides a ‘reliable’ source of income. I hate to say it because I wish I didn’t have to rely on trading my time for my money, but as of right now my options are somewhat limited. Being employed keeps me active in my own life, trying to change how I’m making my money and how I’m spending my time. By being stressed from my working situation, I am more motivated to make changes and find a ‘way out’.

Using seemingly negative stressors in a positive way can be a huge motivator. Above all, remember that everything will take time to change. Almost nothing can be changed immediately. Being able to cope with the stress in the meantime and being able to deal with the time it takes to change things is what makes or breaks people; it’s what keeps some people biting their fingernails and it keeps other people looking for alternatives to their current situation. The important thing to remember is that we all have a choice with how we deal with stress. Don’t bite your fingernails.

The 401(k) plan is something that many people hear about, but a huge part of the workforce doesn’t fully understand how they work. I’m going to outline some of the basics to a 401(k) plan and also my opinions as to how much you should put in, when to start it up, etc.

For starters, the term 401(k) just comes from the section of the Internal Revenue Code that this plan comes from. Section 401(k). Not really that big of a deal, and apparently the government couldn’t come up with anything more exciting - at least it’s easy to remember where to look in case you need to dig up some facts. A 401(k) is an employee-sponsored retirement plan. You have to be employed in order to start a 401(k) - some people may notice that they can’t open a 401(k) even though they are employed; if you work for a non-profit organization, a 403(b) is very similar and is becoming increasingly identical to the 401(k). 401(k)’s invest in a number of assets - stocks, mutual funds, etc. It depends on the employer as to how this mix will be made up, but typically it is something very safe in the long run and something that grows very well. There are contribution limits of $15,500 per year per person. Quite a bit of money, as a lot of Americans don’t have enough income to fully fund their 401(k) each year; this limit will be increasing in the future years, just as a heads up.

Starting up a 401(k) offers a number of benefits besides just having a retirement account set up. Many employers offer matching, some up to 100%. Matching is a simple concept - at my job, when I put $1 into my 401(k), my employer will also put $1 into it (up to 4% of my income). Some don’t offer 100% matching, and some offer none. Those that do most often have what’s called a vesting period. Vesting refers to how long one has to be at the employer for the matching to be kept. My current employer starts this the first day you start your 401(k), but others can go up to three years - the legal limit is three years and then you are vested. Some will offer different increments - at six months they’ll give you 25% of what they put into your account, for example. If you’re unfamiliar with these, check with your employer to see what matching and vesting procedures they are using. If they match you, you’re getting a 100% return on investment; pretty good, if you ask me.

401(k)’s also operate tax-deferred, which can be a huge bonus. Tax-deferred means that it’s taken right out of your paycheck, before the taxes are - they are deposited into your account, where they grow. And grow…until you’re legally able to withdraw money without a penalty (typically 59 1/2, with a few exceptions that I won’t go into). You are taxed on the money when you take it out, but it’s been growing tax-free for years which will help balance out any taxation. This saves you money two different ways: 1 - You are not paying income taxes on that portion of money you put into your 401(k). 2 - You are automatically saving, and helping fund your retirement.

What if you’re self-employed, though? Sorry to say, but the 401(k) doesn’t apply to you - instead, the SEP, or Self-Employed Pension - does. SEP’s operate similar to 401(k)’s, but offer lower administrative fees and different contribution limits. I’m not very familiar with these plans, but presently the contribution is something along the lines of 25% of ones income, or $44,000; whichever is less. I won’t go into much more detail than that, but if you’re self-employed, do some research if you’re interested.

How worthwhile are these retirement plans, anyhow? For that, I resort to my good ol’ DinkyTown 401(k) Calculator. Click on the picture below to be taken to the full version - essentially you will see that if I put in $4000 a year, get decent employer matching and don’t touch it till I”m 65, I’ll have slightly over $2,000,000 in my 401(k).

Just as a quick recap, I’ll outline the basics:

• 401(k)’s and 403(b)’s are retirement accounts set up by an employer.
• Many employers match a certain percentage or dollar amount that you put in.
• Money in a 401(k) or 403(b) grows tax-deferred - it is taxed when you withdraw money.
• Money put into a 401(k) or 403(b) will lower your net income, saving you tax money now.
• If you’re self-employed, look in to a SEP IRA account.

401(k)’s are great ways to invest money for your future. If you are relatively young - in you’re 20’s - and have a 401(k) started up, you’re off to a fantastic start. Even if you’re older, 401(k)’s can help you out even if you’re just starting out.

Financial goals are important for people to have, as it helps them gauge a lot of things - like when they can afford to retire, for example. A big problem I’ve noticed is that many people don’t know how to set good financial goals, and many people don’t know how to properly track their progress once they do set their goals. I’ll briefly attempt to tackle this problem, with a few things that have worked for me.

One of the hardest parts of setting goals is, well, setting them. I know it sounds a bit obvious, and it is; unfortunately, it doesn’t make it any easier.When I started setting my financial goals, I realized that the hardest thing was figuring out where I wanted to be, and when I wanted to be there. I had to take many different factors into consideration, including how I was going to accomplish my goals. I have a long-term goal of retiring by the age of 45, but in order to do that I need to achieve a lot of smaller financial goals. Saying that I wanted to be retired by 45 wasn’t enough just by itself; in order to make that goal actually mean something, actually feel attainable, I needed to make smaller goals, or benchmarks, to help accomplish that.

Figuring out what is attainable depends on your own personal lifestyle and income, among other things. I live a fairly frugal life; as a general rule, I don’t spend money on something unless I genuinely need it. Somebody who lives a different lifestyle than me - somebody who lives in a nicer apartment or house, somebody who drives a nicer car, or has ‘nicer stuff’ than I do, will likely not have the same type of goals I do. For somebody who ’splurges’ on these types of things, retirement at 45 may be unattainable.

Making smaller goals is essential to accomplish your bigger goals. So you want to be able to purchase a house in 5 years? Depending on your current situation, you may need to make other goals; develop a more vigorous savings plan for a down payment, clean up your credit and remove as many debts as possible, etc. Something I do before I set goals is to estimate how much it will take to achieve my goal. If I want to be able to purchase a house in four years, after I have found a job and generally know where I’m going to be living, I need to figure out what kind of a budget I’ll need, then how much I need to save each year up until then.

Smaller goals also make the bigger goal seem less daunting. If I were to make a goal of buying a house in 5 years, but didn’t have smaller goals to help me work my way toward it, I may get sidetracked and discouraged. By making small goals, like checkpoints for along the way, I’m helping my overall cause by tracking my progress and also am encouraging myself by accomplishing other goals along the way. The final result doesn’t seem as difficult when it’s broken up into smaller parts. These smaller parts also help keep me on track and let me make any adjustments if necessary; if I find that I’m not saving enough money, I can make a conscious effort to cut down my expenses or increase my income somehow in order to get back up to speed. If I’m cruising along much quicker than expected, I can either continue the cruise, the the ‘extra’ money away/invest it in something else, or maybe splurge just a little if I think it’s something I’ll be able to realistically cope with.

Goals also need to be challenging. For me, buying a house in four years seems like a very difficult task. I’ve still got two more years of college, and my expenses after college will go up considerably. My income will rise as well, but these may not be proportionate. By giving myself something that I really need to work for in order to achieve, it makes that final result feel much better. I know that I’ve accomplished something that actually required a change in me, a constant commitment.

Commitment is another thing that can make or break goals. I’ve got a list of goals that I’d like to accomplish, and I have this list tacked to my wall in two different locations. When I started these goals a month and a half ago, I looked at them every day just to remind myself of what I wanted to do, and how I wanted to do it. Now that I’m a month and a half in, I don’t feel the need to look at them every day. Trent over at The Simple Dollar made a great point about his personal finance management - he related it to training wheels. My sheet of goals has turned into just training wheels. I know what I have to do now to reach my goals, but I can always put my training wheels back on - look at my goals - if I need a bit of extra help remembering. By ingraining this into my daily routine, I don’t even think about these things anymore. What was a chore at the beginning of the year is now scheduled into my day, is so solidly with me that I have a hard time doing otherwise.

Measuring your progress is a crucial part of reaching your financial goals, but more important than measuring your progress is how you handle your progress if you aren’t where you really want to be. It’s easy to get discouraged, it’s easy to become pessimistic about your financial goals. It’s easy to become pessimistic about money in general - I can’t even begin to describe to you how many people don’t want to talk about finances for one reason or another - they don’t understand it, or they’re struggling financially, or think that talking about finances is bad. By shutting out financial discussions, these people are basically condemning themselves to 45 years of working 9 - 5 five days a week. They’re extending the amount of time they have to spend working a job they probably want to leave early, just by neglecting discussion of how they can better their situation. Goals work the same way. If you get down about failures you make along the way, it’s important to keep on trudging along no matter what. There are some goals that I’ve made for the year ahead that I know I will likely not accomplish; but instead of looking the other way and ignoring them, I am taking action to rectify the situation or at least get a plan in motion for how I can fix it next year. Pessimism, as cliche as it sounds, kills dreams. By keeping a positive attitude, you won’t lose sight of the final result and you’ll do what needs to be done to get there.

When you finally do reach your financial goals, you should reward yourself somehow. For me wanting to buy a house of my own, that is reward enough; having the sense of pride that homeowners have. Some people might want to take a vacation, buy a new TV, or just take a few days off work to relax. Whatever it is that will make you strive more for your financial goal, make it done - you’ll find that you are more likely to work harder toward reaching that point. Setting up checkpoints - or smaller goals - along the way can be a great way of rewarding yourself for your progress so far. Whatever happens, just make sure you keep your eyes on the final goal you’ve set for yourself, and as long as you work toward that goal you have a good shot at reaching it, maybe before you had planned.

I have heard many a people say that they don’t need - or even want - credit cards. Many proclaim they are bad, and many say that they’re good. Both sides of the argument have valid points in some instances, but not all points made in the argument apply to everybody. Here’s my stance on the subject…

 What the ‘credit cards are bad’ people tend to say is that credit cards lead to financial problems. People will use cards, max them out on buying luxury goods and either fail to make timely payments, or get buried under mounds of interest fees and eventually, it leads to a financial breakdown. Many people I know live this type of lifestyle, charging what they really should not be spending money on. Some people do it to impress others, some people do it because it makes them feel better (until the bills roll in), others do it because they don’t realize they don’t have the money. I agree with this points.  Maxing out credit cards is never a good idea, especially if you can’t afford to pay it off.

Unfortunately, many people who say that credit cards are bad also refuse to take the time to properly educate themselves on how credit works and what it means.  Some of my friends max out their credit cards and don’t realize the repercussions; paying interest, for example. Sometimes they have the money to pay off their card in full, but don’t because they don’t realize they are paying interest. Proper education on credit card usage is vital - without being aware of how credit cards work, and how to responsibly manage them, it’s very likely that people will find themselves in problems.

What the ‘credit cards are good’ people tend to say is that credit cards offer flexibility and convenience. Being able to pay with a credit card is a convenience for most people; being able to pay at the pump, purchasing items online, utilizing 0% APR offers for larger purchases or balance transfers. Utilizing credit cards allows people the flexibility to pay over time, and a lot of smart credit card users will only do this if it’s on a 0% APR offer and they have a specific reason to not pay off their card in full. I also agree with this point. Credit cards are incredibly useful and convenient.

In addition, credit cards tend to be more secure than carrying around cash. A simple call to a credit card company if one has been lost or stolen will put a freeze on the card, or cancel it completely, and a new card can be issued. Many issuers don’t even hold you responsible for the charges made. If you lose cash, there isn’t anybody to go to for the most part.

All the above being said, I think that credit education is the single most important factor when deciding if a credit card is a good idea for you. Read about credit cards, how to use them responsibly, and start out small. Don’t go on a spending spree, and pay off your card in full every month to avoid paying interest. As with many things, moderation is the key. I don’t buy something on credit unless I can afford to pay cash for it. I use credit very frequently because it is convenient, I can pay my cards off a few weeks after the purchase and thus earn some interest on my money, and it helps build my credit history in a positive way. Building up my credit history is important if I want to apply for a home or car loan. Take the time to get educated before you decide to use credit cards, and make sure you are aware of your spending - then your credit cards will help you instead of hurt you.

I’m assuming that most readers of MTC believe that money, whether they like it or not, is an important factor in their life. Of course, though, not everybody is of the same belief.

Recently I came across a few posts on various forums and some of my friends and colleagues commented to me about how they think money is unimportant; one forum post even described money as meaning “absolutely zilch”. He went on to describe how happiness is more important than money, and while I agree with that statement, I think that he was underestimating the importance of money.

A majority of people trade their time for money. By putting in sometimes long hours at work, they get out a (hopefully decent) paycheck. Some people make more money than other people depending on many things including how important their job is perceived to be, how difficult it is perceived to be, and what sort of education or training is required to do it. I use the words perceived because I think that much of this is quite trivial. The importance of one’s job isn’t something that is agreed upon by all people; basically it’s agreed upon by whatever pays the individual for his or her time.

For everybody, money means food on the table. Money means a place to live. Money means clothes to wear. If nothing else, money provides the necessities. I also believe that money can help people be happy. I do not believe that having money inherently is pleasing, nor do I believe that buying “stuff” is inherently pleasing. Granted I may get some amount of joy out of purchasing a new car or video game, but the happiness I get from spending time with friends and family far outweighs this joy. I’ll make the assumption that for most rational people, this is also true.

Think about a world in which you don’t have to trade your time for money. Say you invest wisely and are able to live off dividends and various income streams (business investments, real estate investments, etc) coming in; you never have to work another day in your life. What will this do for your overall level of happiness? Chances are that it will skyrocket - no longer do you have to be stressed at a job that you may not like. Even if you do like your job and you continue to work, you don’t have to rely on the money coming in from it. For me, freedom to do whatever I please and be able to afford it is the ultimate happiness. Having hours and hours each and every day to socialize with family and friends, the important things in my life, without having to worry about if I’ll have enough money to eat will be an amazing feeling.

None of this would be possible, realistically, without money. Money is simply a tool in which we are able to trade for things that we want,things that we need; and if you invest it wisely enough, money can buy your time in the future.

Like it or not, money plays a huge role in the lives of all of us. Money allows us to enjoy the standard of living that we currently enjoy. To deny its importance is foolish. What people should realize, instead, is that money isn’t the only important thing; only that it is a tool.

Something that is largely overlooked its time management and the implications of good time management versus poor time management. Obviously there is a finite amount of time in each day, so the trick is to maximize your productive time and minimize your unproductive time. For a lot of people, all of their extra time involves sitting around watching television or engaging in something else that is unproductive. In order to begin the process of managing your time wisely, it’s important that you identify what is important to you and what is unimportant to you.

For some people, spending time with family is important. For others with no family, or no family around, perhaps it doesn’t play as large a role. I personally fall into the second category: I have no family that is nearby and so I have virtually no time devoted to family besides an occasional phone call or weekend visit (which happened this weekend). This leaves me with a lot more time to devote to things like furthering my education, engaging in social activities, and investing my time in developing skills that can push me further towards my goals.

Things that are unimportant to me include things that will not better me or push me towards my goals. This means mindless tasks like watching most television, movies, drinking for the sake of getting drunk, and other things that yield me nothing. I value my time very highly and so I try to spend as little time as possible doing mindless things. That being said, I still am human and need a mental rest every now and then, and so I will spend an hour every few days watching TV or browsing the Internet even if it’s not really helping me.

Now that I’ve identified what’s important to me (bettering myself and moving towards my goals) and what’s not important to me (mindless activities and things that hinder me from accomplishing my goals), it’s time to start thinking about how to break up my day so that I maximize my available time by cutting out the unimportant. I’ve been criticized by my peers for making every morning an “early” one (I say “early” because in college, anything before 9am is considered early), but I find that since I took the steps to make my mornings more productive, I can make my evenings more enjoyable and overall I’m in a better position. I wake up each morning by 6:45 and start my day, eating breakfast and then going to class until 1:00pm every Monday, Wednesday, and Friday. I have no class on Tuesdays and Thursdays, but still wake up at 6:45 regardless of what time I have to work, if at all, because I can be far more productive when I’m not distracted by my roommates and friends.

One of my most difficult goals is to be able to retire by the time I am 45 - something that’s relatively unheard of for most people. On Tuesdays and Thursdays, I usually spend about an hour or so reading the news to see what is going on in the business world. This helps me gain a general oversight of what is popular, and it gives me a better general understanding of how the business world is working. I usually then devote some time, either before or after work depending on when I work, to updating my blog and brainstorming ways that I can maximize my spare time and money in the future. Some may see this as generally unproductive, but I’m confident that it’s a worthwhile investment; sometimes I will use this time to read or do homework as needed.

My days are largely sporadic because I’ve got a part-time job without set hours each week; so each week is different. It’s hard to plan my days then until I know when I am supposed to work. But, the latest I work is 8:00pm (retail) which still leaves me a few hours before I go to bed for the night. In this time I read, update my blog if I haven’t found time to earlier in the day, finish any homework I may have, and continue to find ways to move myself towards accomplishing my goals.

By managing my time wisely for the past month, I’ve noticed that I’m far more productive, find myself being bored less of the time, and am happier and healthier. I get a good night of sleep every night, even if I’m only devoting seven hours or less, and in the mornings I usually wake up feeling refreshed and ready to tackle the day at hand. Pick out the important things in your life and emphasize those when thinking about how to maximize your time. I suggest waking up early to accomplish things that may otherwise go undone in the day. Avoiding distractions helps you be more productive and being more productive helps you accomplish the things in life that truly matter to you. Don’t let anybody dictate how you spend your time; my friends think I should spend my time drinking and enjoying “college life”, but I know that through good time management I can enjoy college life without drinking and still accomplish what is important to me. The only thing keeping you from accomplishing your goals is how you spend your time. Master your time, and you can master almost everything else you want.

Well I wasn’t even planning on writing an article like this, but sitting here tonight just browsing TV stations and doing a bit of light reading, I suddenly became inspired. I just kept the channel on from the program I was watching, and now it’s an infomercial for “Winning in the Cash Flow Business”. They claim that you can “retire earlier than you EVER dreamed possible!” While I hope that this goes without saying, I still feel the need to comment on this - and other “business opportunities” - and how if it sounds too good to be true, it’s likely that it is too good to be true.

I did a bit of further digging on “Winning in the Cash Flow Business”; and when I say further digging, I mean I went to Google and typed in the title, then hit on the I’m Feeling Lucky button. I was taken to InfomercialScams.com where I read many comments about people dropping hundreds, even THOUSANDS of dollars on this. After reading the first handful of comments, I was too disgusted to read on.

Because this topic is painfully obvious to me, I am cutting it short. Before you invest in ANYTHING, do your research. If an offer sounds very good and probably too good to be true, then it probably is. Researching things before you spend money will save you hundreds or thousands, and many headaches as well. Lastly, don’t be too anxious to earn money that you become short-sighted of these factors. And if you’re going to drop any money on “Winning in the Cash Flow Business”, send me money instead and I’ll find a use for it. =)

I recently made a page that has my credit card picks on it. On it I have a few different sections - Student Cards, Rewards Cards, and cards conducive to Balance Transfer options. As time goes by, I’ll be updating that list with more cards and bad cards will be removed. I will take suggestions on cards that I should add on to there.

Part of building financial responsibility is being able to use credit cards responsibly as well. Overspending on credit cards can lead to financial difficulties - I have seen it firsthand and have read about it on other blogs Applying for credit cards just for the heck of it is a good way to take some hits on your credit score and, if you need a good score to get a loan, it is probably a good idea to not to apply for new credit close to the same time that you are applying for a loan.

Overall, be responsible when dealing with credit cards and do NOT overspend. I’ll be making an update later this week about the importance of budgeting and how it can impact your financial success.

101 Goals in 1001 Days is a concept I gathered The Simple Dollar, another Finance blog I read. The concept, however, certainly isn’t new and wasn’t even made up by him. I did a bit more searching, and decided to just do some copy/paste work to describe how it works in a nutshell.

The Mission:
Complete 101 preset tasks in a period of 1001 days.

The Criteria:
Tasks must be specific (ie. no ambiguity in the wording) with a result that is either measurable or clearly defined. Tasks must also be realistic and stretching (ie. represent some amount of work on my part).

Why 1001 Days?
Many people have created lists in the past - frequently simple goals such as New Year’s resolutions. The key to beating procrastination is to set a deadline that is realistic. 1001 Days (about 2.75 years) is a better period of time than a year, because it allows you several seasons to complete the tasks, which is better for organising and timing some tasks such as overseas trips or outdoor activities.

Some common goal setting tips:
1. Be decisive. Know exactly what you want, why you want it, and how you plan to achieve it.
2. Stay Focussed. Any goal requires sustained focus from beginning to end. Constantly evaluate your progress.
3. Welcome Failure. Frequently, very little is learned from a venture that did not experience failure in some form. Failure presents the opportunity to learn and makes the success more worthy.
4. Write down your goals. It clarifies your thinking and reinforces your commitment.
5. Keep your goals in sight. Review them frequently, and ensure that they are always at the forefront of your thinking.

I have made a list of my goals at this page and will be using that to track my goals. Most of them are not financial, but some are.

So often you read about New Years Resolutions, and other goals that people have, and so often many of it goes undone. We set these goals, these expectations for ourselves and then we forget about them later. This makes goals worthless. Remembering goals and working at them every day is the only way to truly accomplish them, no matter what the goal may be. Goals help keep us progressing instead of regressing. Goals help us evaluate that progress, as well. I think goals are an integral part of getting out of a slump - but it’s working towards those goals instead of ignoring them that is ultimately going to be what moves us along in the right direction.

Over the years, I’ve noticed that many people do not save for retirement until they are well into their working lives. Often times, people don’t even start saving until they’re in their mid- to late-twenties. Having a father who is a Certified Public Accountant, I was made aware of the benefits of saving while I was young.

While you are young, though you earn less money, it’s taxed much less. Last year, for example, I got basically all of my Federal taxes back. Since I’m taxed at such a low bracket, the money I made last year (and the year ending this April 15) is good to invest in a tax-exempt account, like a Roth IRA. These accounts are nice, because the money in them can grow tax-free. I don’t have to worry about paying taxes when I take my money out, and I don’t need to worry about paying a penalty so long as I don’t take out more money than I put in the previous year. This makes it a great savings tool for the long run - retirement - and also good for other things like a down payment on a house, though personally I will invest my money differently.

Once you have any earned income, you can put money into your Roth IRA; as much earned income as you have. By putting money into my Roth IRA for the past few years, I essentially have a huge amount of money waiting for me when I am 60 even if I don’t add any more money for 40 years.

Another benefit of saving money early is to help keep yourself out of debt. While I strongly encourage everybody to live well within their means, sometimes there are unexpected emergencies that can cause hundreds or thousands of dollars - car problems, health issues, etc…by saving money early, I’ll be more prepared to handle tough financial situations in the future.

On average, Americans typically spend more money than we make. Certainly this is obviously not true for everyone, hopefully everybody who reads this, but it’s still a scary statistic. Putting away 2%-5% of your gross income can greatly help you accomplish future goals, and will give you peace of mind by knowing that you’re financially secure.

In the meantime, I’ve found that the Roth IRA calculator at DinkyTown.net is a good tool to see roughly how much you may have in your Roth at retirement. If I don’t add anything else in, I will have about $188K assuming a 9% return rate. Not bad, for not throwing any more money in there; so just think about how much that’ll grow when I do add money each year!