I don’t give a flying nun about inheriting money when my parents eventually buy the farm. As far as I’m concerned, it’s their hard-earned dough and they should use every goddamn penny of it to enjoy their retirement and live comfortably until the day they die. In fact, I truly hope they do!
But one of the greatest gifts they can give me instead is the knowledge that their retirement and passing won’t be a financial burden on me. Knowing that my parents have a solid retirement plan will grant me enormous peace of mind. It will allow me to focus on growing my own wealth so that when I get to the age where I’m allowed to be embarrassingly blunt in public, I won’t be dragging down the finances of my younger relatives.
When you’re short on money and long on time you get creative about paying for things. And a great, creative way to save money on goods and services is by trading for them with other goods and services.
I haven’t paid for a haircut in literally years. My hairstylist friend just happens to be a mom, so I trade babysitting for haircuts and we both walk away happy. This friend trade is a mutually beneficial arrangement: we both get something we really need, we both save money, and we both get the satisfaction of helping a sister in her hour of need.
But the friend trade is a delicate art. There’s no faster way to sour a friendship—and jeopardize your future trading opportunities—than to badly mishandle the intricacies of the friend trade.
Let’s examine how you can save money by navigating the waters of friend trading without being a total garbage person.
Ok I know I just told you to start working out as a way to stay healthy and wealthy, but listen up: you can do it all without a gym membership.
Gyms are smelly, crowded, and over-priced. Their hours are sometimes inconvenient, and there’s no guarantee you’ll get a turn on the equipment you want to use or fit into that over-crowded aerobics class.
Even the most affordable, at $30 a month, are a big chunk of change that you could surely use for more lofty goals. And while the most expensive ones also offer things like saunas and in-house massage therapists, do you really use those services often enough to justify paying $500 or more a month?
“If you don’t start saving your money when you’re young, you’re going to die impoverished, overworked, and alone!” says every personal finance blogger ever to young people just starting out in the world.
And while it’s only a slight exaggeration, this kind of enormous pressure can be overwhelming and demoralizing when you’re just starting to get your financial life under control and barely bringing in enough money to make ends meet.
So what’s a young, financially inexperienced person to do? What’s anyone with bills and debt to do with the specter of an empty savings account looming and no solution in sight?
The answer, as with most personal finance, is to start small. Because when saving, your little savings really do add up.
Here at Bitches Get Riches, we’re constantly extolling the virtues of compounding interest, which Albert Einstein, Mother Theresa, and Nelson Mandela all deemed the Eighth Wonder of the World.* This might lead personal finance novices to believe that interest is universally a great and wealth-building thing. Not so, dear readers. Not so.
Just as interest can work for you, contributing mightily to your financial goals over a long period of time, so it can spell your very doom. DOOM.
Like a monetary Dr. Jekyll and Mr. Hyde, interest has both your best interests (see what I did there?) and your utter financial destruction at its heart. Let’s explore its dual nature with a healthy dose of hyperbole, shall we?
Back when I lived in a hippie commune with approximately nine humans and 37 dogs, I biked to the library on a regular basis. It was an easy way to keep myself in reading material without spending all of my meager paycheck on books.
As I was leaving one day, I asked one roommate if she wanted me to pick up anything at the library for her. Her response: “Is it free?”
Is it free? Is it free?
Let’s pretend for a minute that it’s not completely weird and unbelievable that an adult human being could grow up in the United States without ever having learned the first thing (literally, the very first thing) about the public library. Let’s also set aside the fact that this particular person was an English major! I’ll just state, definitively and for the record:
The library is fucking free, you fool. So why the hell wouldn’t you use it? Especially if you’re on a tight budget and trying to save money?
If I had to rank all the things I love to do in my precious free time, where would opening a retirement account fall? Let me see, hmm… Above a root canal, but below politely accepting a religious tract from a door-knocking missionary. What can I say? Some of them have pretty nice artwork!
Have you been procrastinating on opening your retirement account? Feeling lazy? Avoidant? Afraid of the paperwork? Feel like you’d rather use that money on stuff right now? Obviously I feel you.
But buck up, son! I’m about to tell you why you can’t afford not to open a retirement account.
To recap: Americans have access to two main kinds of retirement accounts.
First, a 401(k)—or 403(b), if you work for a nonprofit—is a retirement fund facilitated by your employer. You set it up so they can take money directly out of your paycheck and squirrel it safely away for you to use when you’re terrorizing orderlies in the nursing home. That way you can focus on maintaining your record as Wheelchair Drag Race Champion of Shady Hills Retirement Community and not get distracted by petty financial concerns.
Second, there’s IRAs (individual retirement accounts). IRAs are very similar to 401(k)s, but they’re attached to you directly instead of your employer. There are other differences, but meh, they’re pretty minor. You can get acquainted with the finer points later.
Retirement accounts are powerful tools for growing wealth and stability for your future self. The trick is you have to opt into your retirement account. If you’re self-employed, or you work for a company that doesn’t offer 401(k)s, you need to go out and open your own IRA. And if you work for a company that offers 401(k)s, you need to sign up and voluntarily tell someone to NOT give you part of your paycheck every month.
As broke as you are right now, ignoring a perfectly good retirement fund is a terrible idea. Because if you do that, you’ll lose money in three different ways.