I was wondering when do you all think is the best time to start saving for retirement (i.e. 401k and other retirement plans)?
This is a rhetorical question, right? One of the biggest finance regrets you'll read about is: "I wish I had started saving years earlier."
I learned about Roth IRAs and other aspects of personal finance in high school, but I did
not implement that wisdom when I got my first job at age 18 (part-time, freshman year). If I had a time machine, one of the big "do-overs" would be to establish a Roth IRA at age 18 and never withdraw from it. Even age 20 is significant with regard to how much it accelerates the enormous power of compound interest.
I plan on teaching my future kids everything I've had to learn on my own about personal finance, and max out their Roth IRAs at age 16 or as soon as they can legally contribute. I'll even "match" their contributions. I've looked at the online calculators, and even if people contribute to their Roth IRA at a young age and then never touch it for many years later, the head start advantage snowballs like crazy. Millions of dollars.
Have you earned at least $1000 in income in 2016? That's the minimum initial contribution for
Vanguard's Target Retirement mutual funds. At age 20, maybe do the Target Retirement 2060 fund.
I don't want to downplay enrolling in some formal class on personal finance, but your primary focus is on succeeding in your degree program, graduating, and preparing for graduate/professional school. That, and there is just
too much free information to consume online and in cheap books, that there is no need to spend money on a formal class that force-feeds you content via lecture. Yuck. So passive.
- Start with Bogleheads Wiki. It's solid. Devour every article that interests you. Personal finance, retirement, investing, beginners guides, etc. Their Personal Finance Planning Start-up Kit node is a good starting point as well. You don't have to be an expert in everything finance or investing before getting started. Paralysis by analysis is a common enemy in life.
- Dr. William Bernstein is a physician and finance/investing author. He wrote a short e-book, If You Can, that's free and only a few pages long. There's a PDF link available at that link.
- Since this is SDN, no list is complete without a plug for the White Coat Investor blog. I linked to the "Start here" page. I benefit nothing by kissing ass, so I genuinely recommend devouring that blog as there is a lot of good content and tutorials, even if you're not a current or future physician.
- I personally started my journey reading books like The Money Book for the Young, Fabulous, and Broke by Suze Orman (ha! don't knock it!), Personal Finance for Dummies by Eric Tyson, and The Millionaire Next Door by Thomas Stanley and William Danko. I also devoured finance forums such as CreditBoards to really master how to build and rebuild/repair credit. There is a ton of misinformation in this area. I also lurk on the FatWallet Finance Forums. I'd also like to plant the seed and introduce you to the world of "Financial Independence"/Early Retirement by recommending Mr. Money Mustache's blog to at least introduce the options available to you. He and his wife worked from about age 22-30 and saved enough for retirement that they were able to quit at age 30 with enough money (less than a million at that time) to have the freedom to do whatever they wanted with their lives for the rest of their lives. Doesn't mean they don't work jobs, but Financial Independence allows one to work whenever and however one wants without needing to work to survive and pay for food/shelter/debt/lifestyle. It's a refreshing mentality.
Good luck! Start your Roth IRA this year, even if it's just $1000 that sits there.
