Working full time in the “real” world when you’re young is exciting. In addition to contributing, learning, getting your life on track, etc. it’s awesome to finally have some real spending money that you can start establishing your life with. While after living more-or-less your entire life on limited funds / someone else’s (your parents) dollar, it is good to be able o support yourself and do some of the things you want with that money.
While it’s great to have freedom, and it’s definitely important to experience life, the unfortunate reality is that it is also a good time to be saving for your retirement. I don’t mean other long term goals like buying a house or whatever, but your retirement. The fact of the matter is, even if you can’t save much, even if it seems forever away, and even if it’s the most boring thing you can do with your money, it is hugely to your advantage.
You can find endless articles and worksheets that show you how compounding is your friend and it really is. I’m not going to go into it, because it has been thoroughly explored better than I would be able to explain. Even Einstein thought the principle of compounding was the most powerful force in the Universe.
While the percentage you can earn on your money because of the extended timeline is awesome, there is a more important reason to start young is because you most likely have far fewer obligations. Don’t get stuck in the trap of assuming you will start saving when you’re older, when you are making more, when retirement is closer. All of those things will happen, but at that time your lifestyle will likely be growing along with your paycheque.
Bigger mortgages, families, more refined tastes, along will many other factors will eat into your budget, and if you haven’t established a good base of saving, then it’s unlikely you’ll make up ground. It’s even better to save while you’re younger, stop for a few years in your 30s and start up again then it is to wait until you’re in your 30s.
Don’t fall into the trap of worrying about it tomorrow or thinking you don’t make enough. Everything starts somewhere and you can’t keep pushing it until tomorrow forever. You don’t want to be in a bad situation before you start saving.
Another important side point is that when you’re young you also have time to take a few risks and make some mistakes with your money. You have your whole life to make up for it. It’s far better to take some calculated risks for higher rewards when you know you can recover, rather than making a gamble when you’re older because you think you have to in order to retire.