Approaching My Financial “Scary Age”
In season 4 of Sex and The City, the main characters talk about their “scary age”– basically the age they are afraid of and dreading for various reasons.
Everyone has their own scary age when it comes to life – details on mine are for another post! But when it comes to finances, 25 is definitely my scary age. And since I turned 24 a month ago, it’s quickly approaching.
Why 25 Scares Me
We’ve all seen those graphs in blog posts and news articles encouraging us to save at an early age, and showing us the difference between starting a savings plan at two ages – the younger age is ALWAYS 25. Many online retirement calculators start at 25. What that means to me is that the years before 25 are freebies – you can mess up financially, and still have plenty of time to bounce back. But after 25, you need to save. And plan. And it all matters.
Since I graduated from college and started learning about personal finance, I’ve always been younger than 25. Even if I’m not doing things 100% correctly, I tell myself it’s ok because those were “bonus” years. But once I turn 25, the stakes (in my head at least) are just a little bit higher – and if I’m not saving enough, or choosing the right investments, or generally not making the “right” decisions, it could really have an impact down the road! So I need to learn more about investments, save a higher percentage of my paycheck, and knock out my student loan. When I think about doing all that and the financial ramifications of starting grad school and buying a house in the next few years, I can really work myself into a tizzy!
How I’ll Prepare
Here are some things I’ve already done or plan to do to combat my financial anxiety about turning 25:
- Earn side income above and beyond my normal paycheck, and use it to eliminate my student loan.
- Increase my Roth IRA/401(k) savings every time I get a raise. (Yes, you can have a 401k and an IRA at the same time.
- Create my own “dollar plan” that maps out some mid- to long-term goals, and their financial ramifications.
- Create a long-term investment plan with a target asset allocation and growth projections.
- Remember that 25 is just a number – good habits are the most important, and less-than-optimal saving or investing is better than none at all.
What it Means for You
I’m guessing that everyone has their own financial scary age. Maybe yours is the year you plan to retire. The years between your retirement and Medicare kicking in. The year you have a child, or the year your child starts college.
No matter what your financial scary age is, it’s probably tied to a certain event that you can plan for. So start now. Decide how much you need to save to meet a certain goal, how you can step up your debt elimination plan to get rid of payments sooner, or what kind of self-education you need to stay on the right track. Talk to your spouse or child, if applicable, and work together to combat some of the financial stressors in your life. Control what you can, and let go of the rest. Know that if you’re reading sites like this one, you’re probably ahead of a whole lot of people in similar situations.
And if all else fails, have an extra big piece of cake – and a few birthday freebies -on the day of your scary-age birthday!
What’s your scary age, and what are you doing to prepare for it? Tell us in the comments!
Try turning 45.
Then you realize you only have 20 years left to save enough to retire.
But I am sure you are very prepared 🙂
There isn’t necessarily exact precision with those graphs and your age. 25-65 are just round numbers–you’ll get the same calculated projections if you saved from 24-64 or 26-66. The number of years is what matters.
Thanks Chris! I think it’s just the psychological effects of 25 always seeming the be the “random” number they pick! Of course I know mathematically it’s the same.
My husband and I started saving and planning for early retirement at age 52 when we graduated from college at ages 21 and 22 respectively…we knew even then that we didn’t want to work into our 60s.
My financial “scary age” has so far lasted for 5 years. I constantly re-evaluate our plan and savings since I want everything to continue as smoothly as possible.
Good luck with your age 25 goals!
It is always good practice to evaluate yourself every year and see where you stand financially regarding your goals. For me, there is no better time than when I celebrate my own birthday. With all the introspection of what happened to me the previous year, I revisit my goals and re-adjust as needed. Every year is scary for me. But I am glad I view every year as scary. It just tells me to not be complacent and continue working.