Aug 29, 2023
Forget retirement, there are some things worth experiencing no matter the price (did someone say Taylor Swift’s Eras Tour?) — at least according to young Americans.
A June report from credit reporting firm Experian reveals that 63% of Gen Z and 59% of millennials would rather spend money on “life experiences” like travel and concerts now rather than save up for retirement.
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According to the report, more than half also admit to having a hard time saying no to themselves when making impulse purchases.
But while it can be hard to pass up on a spontaneous trip to Bali — especially when your golden years seem light years away — here’s how to enjoy fun experiences in your youth without compromising your future financial comfort.
Be intentional with your spending
No one’s telling you not to buy that Starbucks latte or miss out on those [tickets to see Miss Americana herself] — but it’s important to prioritize what expenses and goals matter most to you.
Start out with a budget so you can keep track of your income and regular expenses — like rent and groceries — and figure out how much you can set aside for emergency savings and your retirement fund. Then, you can allocate a chunk toward your discretionary purchases.
Consider giving the cash stuffing hack a go to control your spending. Just take your paycheck in cash and then divide it into different envelopes based on your monthly or week expenses. It can help you better visualize how much you have to spend on monthly necessities like insurance or mortgage payments and what you can actually afford to spend on more frivolous extras.
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Pay down your debts first
While you’re making that budget, don’t forget to take your debts into consideration — whether you’ve got student loans to pay off or credit card interest that keeps accumulating.
It’s important to pay off your bills in full and on time each month, since you don’t want to compromise on your credit score for some fleeting fun.
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And if you’re really struggling to keep track of all your different debts, consider rolling them into a consolidation loan with a lower interest rate.
Open up a retirement account
Your next step is to look into retirement vehicles, so you can actually start saving up for your golden years.
If your employer offers a 401(k) plan, they might even match contributions as well. If you don’t get any retirement benefits through your work, look into opening an IRA or Roth IRA instead.
With a 401(k) or traditional IRA account, you get to divert some of your pre-tax pay into these vehicles to grow tax-free until you make withdrawals in retirement. On the other hand, a Roth IRA lets you pay taxes upfront, so you can enjoy your savings tax-free in retirement instead.
Read More: Dave Ramsey says this 7-step plan ‘works every single time’ to kill debt, get rich in America — and that ‘anyone’ can do it
Supplement your income
Whether you’re saving for retirement, the next big concert — or both — consider finding some creative ways to supplement your existing income.
For example, you could rent out a spare room or turn one of your hobbies or skills into a lucrative side hustle.
If you’d like to dip your toe into the investing world, you can even start with a small amount of spare cash and build your portfolio over time.
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Serah Louis is a reporter with Moneywise.com. She enjoys tackling topical personal finance issues for young people and women and covering the latest in financial news.
