Summary List Placement
Everyone has a moment where some missing piece of financial knowledge clicks into place. For me, it was a simple choice my dad set up for me when encouraging me to sign up for a Roth IRA.
I was just a few years out of college, making $36,000 a year at a writing job I’d recently left the service industry for. I lived in essentially the only apartment in New York City that I could afford without a roommate: a 350-square foot studio in Washington Heights for just over $1,000 a month that I’d ultimately spend seven years in. (I’m sure you get as tired of hearing this as I get of saying it, but that really is a steal for Manhattan.)
Rent ate up such a significant portion of my monthly take-home pay that it made me vaguely myopic about the rest of my expenses. Living alone was crucial to my mental health, so I was willing to dial back anywhere necessary in order to make it work.
Naturally, one of those areas was retirement savings.
I was approaching retirement all wrong, much to my dad’s chagrin
My dad had been urging me to set up an individual retirement account for a few years at that point, but his advice was falling on deaf ears. If it wasn’t an immediate expense, I reasoned, I should move it to the bottom of the list and get to it when I get to it. And nothing felt less immediate than an account I wouldn’t crack into for literal decades.
Obviously that’s not what any financial expert would refer to as a particularly stellar savings strategy, but like most Americans, I didn’t learn this stuff in school — high school or college. I just had the whole adult world of personal finance dropped into my lap upon graduation, with the expectation that I’d figure out what to do with it.
My incorrect assumption was that I had plenty of time to start saving, but thankfully, my dad started to get impatient after a few years. Observing how much of my focus and funds were going toward just keeping my head above water, with no thought of the future, he made me an extremely generous offer designed to change the way I thought about money.
The gift with a catch
My birthday was approaching, and he and my stepmom were planning on gifting me money, he told me. The catch was, the specific amount was up to me. (Sort of.) I could either choose to receive $500, to spend however I wanted, or $1,500 that had to go toward setting up my first retirement account.
Now, let me just say a few quick things before I move on, because while I don’t know what you’re thinking while reading this, I do know what I’m thinking while writing it.
Dang, that’s a lot of money! I’m incredibly privileged that my parents were able and willing to offer me either sum.
I didn’t even realize how lucky I was at the time! It was …read more
Source:: Business Insider