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Tip Yourself First: Are Millennials Saving Enough?

Business, Finance & Economy

Tip Yourself First: Are Millennials Saving Enough?

Tip Yourself First: Are Millennials Saving Enough?

You’ve heard the maxim, “Tip yourself first,” a saying every working person should practice with their monthly paycheck. Certainly, you deserve a tip for your hard-earned work, perhaps ten, fifteen, or even twenty percent. Of course, this maxim is seldom practiced by the young.

Imagine you’ve worked from the time you graduated from college, twenty-three years-of-age, until the age of sixty-five, a good forty-two years. You’ve probably had several jobs in between careers, your earnings have risen and fallen like the stock market, and darn, you didn’t save enough to comfortably retire. What happened? Procrastination. You believed time was on your side,  but marriage, children, mortgage, car notes, student loans, and divorce caused you to save too little too late. This is an all too common scenario in America.

Savings is a big deal. Poverty among seniors living solely on social security is a growing epidemic in this country. Alone, social security is insufficient and wasn’t designed as a single source of retirement income, but as an additional source to replace lost earnings, coupled with savings and or pension. To maintain the same standard of living before retirement, you need to start saving now, preferably the moment you begin working. In forty-years, your savings earn compound interest daily. If you start setting aside a percentage of your paycheck in your twenties—$50, $100 or even $25 a month— you’ll certainly reap the benefit of compound interest over forty-two years. If you start saving $100 per month, $1,200 per year, from twenty-three to the age of sixty-five, you could save roughly $228.151.10 with compound interest. Adjusted for inflation, this amount would be higher. Compound Interest Calculator


Interest Compounded Monthly (Added At the End of Each Month)

Year Year Deposits Year Interest Total Deposits Total Interest Balance
1 $1,200.00 $39.72 $1,200.00 $39.72 $1,239.72
2 $1,200.00 $116.19 $2,400.00 $155.91 $2,555.91
3 $1,200.00 $197.37 $3,600.00 $353.28 $3,953.28
4 $1,200.00 $283.55 $4,800.00 $636.83 $5,436.83
5 $1,200.00 $375.06 $6,000.00 $1,011.89 $7,011.89
6 $1,200.00 $472.20 $7,200.00 $1,484.09 $8,684.09
7 $1,200.00 $575.34 $8,400.00 $2,059.43 $10,459.43
8 $1,200.00 $684.84 $9,600.00 $2,744.27 $12,344.27
9 $1,200.00 $801.09 $10,800.00 $3,545.36 $14,345.36
10 $1,200.00 $924.51 $12,000.00 $4,469.87 $16,469.87
11 $1,200.00 $1,055.55 $13,200.00 $5,525.42 $18,725.42
12 $1,200.00 $1,194.67 $14,400.00 $6,720.09 $21,120.09
13 $1,200.00 $1,342.37 $15,600.00 $8,062.46 $23,662.46
14 $1,200.00 $1,499.17 $16,800.00 $9,561.63 $26,361.63
15 $1,200.00 $1,665.65 $18,000.00 $11,227.28 $29,227.28
16 $1,200.00 $1,842.40 $19,200.00 $13,069.68 $32,269.68
17 $1,200.00 $2,030.05 $20,400.00 $15,099.73 $35,499.73
18 $1,200.00 $2,229.27 $21,600.00 $17,329.00 $38,929.00
19 $1,200.00 $2,440.78 $22,800.00 $19,769.78 $42,569.78
20 $1,200.00 $2,665.33 $24,000.00 $22,435.11 $46,435.11
21 $1,200.00 $2,903.74 $25,200.00 $25,338.85 $50,538.85
22 $1,200.00 $3,156.85 $26,400.00 $28,495.70 $54,895.70
23 $1,200.00 $3,425.57 $27,600.00 $31,921.27 $59,521.27
24 $1,200.00 $3,710.87 $28,800.00 $35,632.14 $64,432.14
25 $1,200.00 $4,013.76 $30,000.00 $39,645.89 $69,645.89
26 $1,200.00 $4,335.33 $31,200.00 $43,981.22 $75,181.22
27 $1,200.00 $4,676.74 $32,400.00 $48,657.96 $81,057.96
28 $1,200.00 $5,039.20 $33,600.00 $53,697.16 $87,297.16
29 $1,200.00 $5,424.02 $34,800.00 $59,121.18 $93,921.18
30 $1,200.00 $5,832.58 $36,000.00 $64,953.76 $100,953.76
31 $1,200.00 $6,266.33 $37,200.00 $71,220.09 $108,420.09
32 $1,200.00 $6,726.84 $38,400.00 $77,946.93 $116,346.93
33 $1,200.00 $7,215.75 $39,600.00 $85,162.68 $124,762.68
34 $1,200.00 $7,734.81 $40,800.00 $92,897.49 $133,697.49
35 $1,200.00 $8,285.89 $42,000.00 $101,183.39 $143,183.39
36 $1,200.00 $8,870.96 $43,200.00 $110,054.35 $153,254.35
37 $1,200.00 $9,492.12 $44,400.00 $119,546.46 $163,946.46
38 $1,200.00 $10,151.58 $45,600.00 $129,698.05 $175,298.05
39 $1,200.00 $10,851.72 $46,800.00 $140,549.77 $187,349.77
40 $1,200.00 $11,595.05 $48,000.00 $152,144.82 $200,144.82
41 $1,200.00 $12,384.22 $49,200.00 $164,529.04 $213,729.04
42 $1,200.00 $13,222.06 $50,400.00 $177,751.10 $228,151.10

Regular Deposit Calculation

Base amount: $0.00
Interest Rate: 6%
Effective Annual Rate: 6.17%
Calculation period: forty-two years

Savings and Investment Apps

Developing a savings habit isn’t easy. Every January 1st, many make this New Year’s Resolution, but somehow their goal is never reached. Today, saving and investing has never been easier. The younger generation has saving and investment tools literally at their fingertips. All you need is a checking account, smartphone, or computer. Below are a few popular apps you can download and start building a cash cushion immediately.

Saving more has never been easier than with Acorn. Remember that penny jar you collect spare change left over from daily purchases? Well, this app is essentially a modern version that automatically collects excess change or dollars from your purchases and sweeps them into an interest-earning investment account. For example, that excess $0.43 left over from your morning coffee purchase is automatically transferred to a savings vehicle of choice.

How does it work? When you download the app to your phone, you will be prompted by a series of questions to create a savings profile. Just follow the instructions, provide your age, profession, annual income, and it will diagnose how much you need to save monthly to reach your goal. The app links to your checking account, debit or credit cards to set up recurring monthly savings.

For college students looking to save money, Acorn is free if you have a valid edu. Email address. For others, Acorn charges a monthly fee of $1 for taxable investment accounts and $2 for nontaxable accounts —Individual Retirement Accounts (IRAs).

This app is ideal those who have a hard time saving and needs someone else to manage their finances.

Digit is the perfect app for those with little financial aptitude. Based on your income level and spending habits, Digit calculates the amount you need to save daily. Once you link your checking accounts to the app, Digit analyzes your income and spending habits and automatically sets aside money to save without throwing you into overdraft (overdraft protection provided). Digit has no account minimums and withdrawals are limitless. Digit charges $2.99 per month for its service.

Stash Invest

With a minimal monthly fee of $1 and no commission charges, you can start investing in stocks and Exchange Traded Funds (ETFs) with as little as $5. Stash is a registered SEC investment adviser that makes it easy to invest. Stash provides personalized portfolios and 30 different investment options. All you need to do is link your checking account and invest whatever amount you can afford (minimum $5 for your first investment). Stash takes into consideration expense ratios (fees assessed on mutual funds) and a stocks trading liquidity (how often stocks trade). Stash develops a personalized investment strategy based on your:

  • Age
  • Income, and
  • Risk profile – Your tolerance or aversion to risk. There are five categories:
  1. Conservative/Risk Adverse: Low tolerance for risk. These investors don’t want to lose principal investment. They are typically retired, live on a fixed income, have shorter investment horizons, and prefers income generating securities. Their portfolio typically consists of safe investments in cash or money market investments, and high-quality short-term intermediate bonds (CDs, treasuries, preferred stock, municipal and corporate bonds, and mortgage-backed securities).
  2. Moderate Conservative: These investors tolerate a little more risk than Conservative investors They invests in fixed income securities, blue-chip stocks that guarantee dividends, and inflation-linked investments like cash, real estate, and some commodities.
  3. Moderate: These investors have long-term investment strategies with specific goals, (buying a home, college tuition, retirement). Their portfolios are balanced with growth stocks, diversified mutual funds, and ETFs that mimic the S&P 500 market index.
  4. Moderate Aggressive:  These investors seek higher returns and are willing to take greater risk with the goal of maximizing wealth in the long term. Growth stocks with high betas are their investment of choice with little preference for dividend generating stocks.
  5. Aggressive:  These investors have a higher tolerance for risk and invest in higher beta stocks with the goal of maximizing wealth. Their investment horizon is long-term and thus they tend to be younger investors. They prefer small-cap, growth stocks, and non-diversified sector mutual funds.

If you’re finding it difficult to form a savings habit, give one of these apps, or others found on the Internet, a try. Remember to tip yourself regularly. The sooner you start saving, the more secure and carefree your retirement years.


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An author with a rare mixture of Southern and Northern charm, E. Denise Billups was born in Monroeville Alabama and raised in New York City where she currently resides and works in finance. She has an MBA in Finance and she's a prospective Ph.D. candidate. A burgeoning author of fiction, she's published three suspense novels, Kalorama Road, Chasing Victory, By Chance, and two supernatural short stories, The Playground, and Rebound. An avid reader of mystery and suspense novels, she was greatly influenced by authors of that genre. When she's not writing or reading, you can generally find her training for road races and marathons. She's a fitness fanatic who loves physical challenges of all types (running, biking, yoga, dance, and more) a discipline she uses to facilitate the creative writing process.

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