The fact of the matter is that when you are young, time is on your side. And the more time you can set aside for yourself, the more money you can save. If you started saving at 35 instead of 25, you would have lost 10 years of massive savings. Your savings rate would need to be much higher to have the same savings as that smart 25 year old. Just take a look at this simple article from Business Insider that shows the ending savings balance of a 25 year old vs a 35 year old. The difference is staggering.
It’s All About Habits
If you are in your 20s, chances are that you aren’t earning much. But you probably don’t have many expenses either. Saving in the beginning will be painful. And many times you will go back to your old habits of wastefulness. But I assure you, that if you are resilient and you keep fighting the urge to burn your cash, you will eventually enter a lifestyle where saving will become a part of your personality. Once your savings build the urge to continue will increase. Losing weight is a concept that is almost identical to saving money. You start, you stop, you start, you stop. But once you do it for long enough, only then do you see a slimmer self. Habits are best formed earlier in life. They are stored in a deep part of the brain which we don’t forget.
What You Should Do
Every time you earn a dollar, the first thing you need to do is to deposit it in your bank. If you make these small deposits on a continuous basis, you have now created a habit. You will need to reinforce this habit until you are living a continuous life of a smaller footprint. Most expenditures are wasteful: TV, cable, internet subscriptions, eating out (huge one!), random frappucinos, clothes shopping, makeup shopping, shoe shopping, and gadgets shopping. We all splurge on something that we really love. A bunch of small cost savings amount to a big number at the end of the day.
Verdict: It is painful to begin saving. The harder you try the quicker you will develop this skill. Bite the bullet and save now so that you can live comfortably later.