Your 20s is the perfect time to enjoy life. You are going to start making serious money for the first time, and you are energetic and want to explore the world. Retirement is probably the last thing on your mind, but you've probably heard from media pundits about how you should start saving now.
The advice seems to make sense, but there's a problem: Saving sounds incredibly boring and is often difficult. How are you supposed to put aside money in an account marked for the future when you have so many other more immediate needs? Here's a retirement action plan for your 20s:
Try active trading. That's right. Facts clearly point to long-term investing as the way to build wealth, but try trading anyway. You never know, you might turn out to be the anomaly who is the stock picking genius of our generation and can trounce the market. However, chances are good that you will lose your shirt. But at least you will gain an insight into how the financial markets work while you have relatively little to lose. You will also start to understand why it's so difficult to beat the market trading securities, which will help you manage your wealth later in life when more is on the line.
Start a 401(k). The tax benefit is often touted as the reason you should contribute to your 401(k), but the automatic withholding from your paycheck is also very valuable. Many people end up being able to sock away more money in a 401(k) than in other types of investment accounts because money is taken out from their paycheck before they even have a chance to spend it. Elect to have a portion of your paycheck go directly to a 401(k) account, and also see if you can have your 401(k) contribution percentages increase automatically.
Learn what type of career you will excel at. While it’s prudent to aim to have your career figured out by the time you get out of college, most people switch careers multiple times in their lifetime. Use your 20s to learn about your strengths and interests, and pursue a job that compliments your skills. It's not too late to make a career change. Picking a job that suits you will allow you to eventually be rewarded financially and emotionally.
Meet the person to share the rest of your life with. Divorce is costly. Marrying the wrong person can ruin your financial life, even if you stay together. You don't necessarily need to find the ultimate penny pincher, but finding someone responsible who at least appreciates the importance of saving for the future will go a long way in helping your finances down the road.
Talk to older folks. Ignorance is bliss, but it's also dangerous. Older folks have done it all, and can tell you about their stories if you ask. The advice of someone who has been there and done that could help you to avoid some of the unrecoverable pitfalls that too many people have already fallen into. Plus, the stories are often very interesting.
David Ning runs MoneyNing, a personal finance site that shares money moves you can make to significantly increase your chances of having a comfortable retirement. He likes to share simple changes that anyone can make, such as picking the best online savings account and figuring out whether a 0 percent balance transfer credit card makes sense.