As a teenager, the stress of impending adulthood is looming over you. Independence sounds freeing, but the thought of navigating life alone is enough to scare someone back into the comfort of youth. With all these challenges and new experiences that you will inevitably have to face, planning for the future is crucial. 

Despite the various obstacles one will endure, there is one overarching concept that brings about anxiety- Finances. Budgeting and dictating where your funds go is a major part of adulthood, which is exactly why starting early can help you reach your future financial goals and allow you to maintain financial security into retirement. 

Typically, when starting a new job, you and your employer will discuss any employee benefits offered by the company. This usually includes a retirement savings plan. Despite this fact, according to The United States Census Bureau, as of 2020 only 7.7% of working Gen Z members owned a retirement account. This retirement plan is also known as a “401(k)”.  With a traditional 401(k) plan, a set percentage of your paycheck is contributed to your retirement account where it will be invested and your total taxable income will be lowered. Many employers will also match your contributions as well, essentially boosting funds. 

 Setting up this type of account in your late teens or early twenties provides significant tax advantages and gives your money more time to grow. It may not seem like a lot at first, but making small, regular contributions to a partial investment account or a retirement account adds up and builds positive financial habits. Instead of regretting how late you started retirement plans, starting as early as 17 can drastically change your retirement funds. 

In addition to a retirement account, learning how to budget helps you establish a solid spending and investment plan for your money. Having enough money for the items you need is important, but to build upon your income, you will need to set aside a portion of your monthly income for a standard investing account. For example, inputting $300 monthly into your account at 18 will help you accumulate upwards of $3.8 million by the age of 65 due to the power of compound interest. 

Compound interest is the interest you earn on not only the money you save but the interest already on it, it is essentially a doubling of funds. Starting just seven years later at 25, your money will only accumulate to $1.9 million, half the amount of our first calculation. Understanding investment basics and policies is the only way to succeed financially. 

Older generations constantly complain that they “Wished they had saved earlier on,” warning younger generations not to make the same mistake. Taking action, creating accounts and investing as soon as possible is the only way to break that cycle of regret.