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Growing up, it’s not uncommon to get “the talk” from your parents. Of course that talk is usually about the birds and the bees, not your emergency savings or 401(k). So, let’s have that chat now, shall we?

There are five easy steps you can take now, as a 20-something-year-old, that will greatly help your future self when it comes time to retire. So what are these five easy steps? We thought you’d never ask…

1. Save your “extra” cash

Yes, step one is really that simple. If at the end of each week, you have extra cash in your wallet, or you find a $5 bill in your pants’ pocket while doing laundry, save it. Don’t spend it just to spend it, save it. Over time, even if you’re just adding a few dollars here and there, it will add up and you will begin to feel like you’re making good progress.

One of the most common excuses for a millennial with an empty savings account is “I’m paying off my student loans.” Even if that is the case, and you are making monthly payments towards your loans, you should still be able to make small deposits to your savings account each month too. The trick is, you need to find a balance between your savings account and your student loans. If that means you have apply for an income-based repayment plan, then by all mean, do it.

2. Open your 401(k) or Roth IRA

A lot of employers will offer a retirement fund, 401(k), and match what you put in, in order to encourage employees to participate. If you’re eligible to take advantage of this at your work, don't hesitate, just do it. Not only will it help you save for your future, but the money deposited in your 401(k) is pre-tax, which means you’ll get taxed on less of an income now, thus saving you money.

If you’re not eligible for a 401(k), you should open a Roth IRA. The money you deposit in this account will be taxed before it goes in, which means you don’t save as much now, but when you withdraw the money upon retirement, you won’t be taxed. In 2017, the maximum pretax annual contribution for a 401(k) was $18,000 and the maximum contribution for a Roth IRA was $5,500.

3. Ask for a raise

According to PayScale.com, only 37 percent of millennials have ever asked for a raise. With that in mind, consider the fact that a typical worker sees most of their wage growth occur between the ages of 25 and 35. These statistics suggest that many young people are missing out on a huge opportunity by not asking for a raise!

If you were awarded a $5,000 pay boost when you’re 25, according to a study done by researchers at Temple and George Mason universities, that pay boost would add up to $634,000 more in lifetime earnings.  

P.S. Nearly half of the 37 percent of millennials who asked for a raise got it.

4. Plan for your future self

Instead of just saying I know I’m going to need money and trying to save “big bucks,” have a lifestyle plan in place that allows you a better understanding of how much you will actually need to save for your future self.

“If you start saving for retirement at age 25, you only have to save about $4,830 annually to reach $1 million by age 65, assuming an annual return of 7 percent after fees. If you wait until age 40 to start saving, you'll need to tuck away much more: $15,240 per year, assuming the same retirement age and annual return.” – Emily Brandon, U.S.Weekly

If you do your research, you might find that instead of having to put $7,000 into your 401(k) annually, you could lower those payments and put more towards your students loans instead. This is definitely worth looking into!

5. Have an emergency fund

If you have an emergency fund, you will (hopefully) be able to avoid unnecessary credit card debts due to unexpected expenses. For example, if your water heater breaks in the middle of the night and you have an emergency fund of $2,000, you won’t have to put the cost of the whole ordeal on your credit card and therefore, will avoid paying off heavy interest rates.

Ideally, it is advised to have three months’ living expenses saved. If that isn’t something you can make happen right now, the important thing is that you have an emergency fund with some money in it. Set up your bank account to make small deposits to your emergency fund each month and watch your savings grow!

Just remember that you don’t have to do this on your own. There are financial planners in your community who would be happy to sit down and discuss your financial future with you to ensure you start out on the right foot.

Growing up, it’s not uncommon to get “the talk” from your parents. Of course that talk is usually about the birds and the bees, not your emergency savings or 401(k). So, let’s have that chat now, shall we?

There are five easy steps you can take now, as a 20-something-year-old, that will greatly help your future self when it comes time to retire. So what are these five easy steps? We thought you’d never ask…

1. Save your “extra” cash

Yes, step one is really that simple. If at the end of each week, you have extra cash in your wallet, or you find a $5 bill in your pants’ pocket while doing laundry, save it. Don’t spend it just to spend it, save it. Over time, even if you’re just adding a few dollars here and there, it will add up and you will begin to feel like you’re making good progress.

One of the most common excuses for a millennial with an empty savings account is “I’m paying off my student loans.” Even if that is the case, and you are making monthly payments towards your loans, you should still be able to make small deposits to your savings account each month too. The trick is, you need to find a balance between your savings account and your student loans. If that means you have apply for an income-based repayment plan, then by all mean, do it.

2. Open your 401(k) or Roth IRA

A lot of employers will offer a retirement fund, 401(k), and match what you put in, in order to encourage employees to participate. If you’re eligible to take advantage of this at your work, don't hesitate, just do it. Not only will it help you save for your future, but the money deposited in your 401(k) is pre-tax, which means you’ll get taxed on less of an income now, thus saving you money.

If you’re not eligible for a 401(k), you should open a Roth IRA. The money you deposit in this account will be taxed before it goes in, which means you don’t save as much now, but when you withdraw the money upon retirement, you won’t be taxed. In 2017, the maximum pretax annual contribution for a 401(k) was $18,000 and the maximum contribution for a Roth IRA was $5,500.

3. Ask for a raise

According to PayScale.com, only 37 percent of millennials have ever asked for a raise. With that in mind, consider the fact that a typical worker sees most of their wage growth occur between the ages of 25 and 35. These statistics suggest that many young people are missing out on a huge opportunity by not asking for a raise!

If you were awarded a $5,000 pay boost when you’re 25, according to a study done by researchers at Temple and George Mason universities, that pay boost would add up to $634,000 more in lifetime earnings.  

P.S. Nearly half of the 37 percent of millennials who asked for a raise got it.

4. Plan for your future self

Instead of just saying I know I’m going to need money and trying to save “big bucks,” have a lifestyle plan in place that allows you a better understanding of how much you will actually need to save for your future self.

“If you start saving for retirement at age 25, you only have to save about $4,830 annually to reach $1 million by age 65, assuming an annual return of 7 percent after fees. If you wait until age 40 to start saving, you'll need to tuck away much more: $15,240 per year, assuming the same retirement age and annual return.” – Emily Brandon, U.S.Weekly

If you do your research, you might find that instead of having to put $7,000 into your 401(k) annually, you could lower those payments and put more towards your students loans instead. This is definitely worth looking into!

5. Have an emergency fund

If you have an emergency fund, you will (hopefully) be able to avoid unnecessary credit card debts due to unexpected expenses. For example, if your water heater breaks in the middle of the night and you have an emergency fund of $2,000, you won’t have to put the cost of the whole ordeal on your credit card and therefore, will avoid paying off heavy interest rates.

Ideally, it is advised to have three months’ living expenses saved. If that isn’t something you can make happen right now, the important thing is that you have an emergency fund with some money in it. Set up your bank account to make small deposits to your emergency fund each month and watch your savings grow!

Just remember that you don’t have to do this on your own. There are financial planners in your community who would be happy to sit down and discuss your financial future with you to ensure you start out on the right foot.