3 Financial Lessons Young Adults Must Learn for a Debt Free Retirement

Thirty two years ago, my husband and I got married. We were college seniors, living at homes, working restaurant jobs, and saving our tips to pay for our wedding of exactly 100 guests in my in-law’s backyard. We floated candles in the pond, hung up pink and white paper bells, set up folding tables, chairs, brought in Chinese food, and served my sister’s bakery three-tier white cake. We celebrated our marriage with families and friends, were exhausted when all was cleaned up, but happy that we managed it ourselves under $1000 and incurred no debt. That was 1984 when we were in our early twenties, naïve to all weddings must-haves, fashionable hypes, and traditions. We learned for the first time what a wedding registration was when friends asked “where are you guys registered?”

Today, the Millennials have it pretty tough. The average wedding cost in the US is $26,645 while most spend less than $10,000, keeping in mind that this does not include the honeymoon lodging and travel expenses.

Comparing this cost of a wedding to a 5% down payment of $10,000 on a $200,000 home, with the exceptions of FHA, HomeReady, USDA and VA loans.

Now compare those costs with the average student debt loans today of an average of $37,000 for an undergraduate degree.

Last but not least, let’s look at the average 29-year-old’s median income reported at $35,000. Granted that wages vary widely amongst states, it’s safe to conclude that Millennials today are faced with the runaway costs of the American Dream on finding a good paying job, paying down their student loans, getting married, and buying a house.

When we got married, we didn’t have the challenges of student debts, wedding or credit card debt, and home prices were not as ridiculously inflated as they are right now. We were poor college students near graduation with a mere eighty dollars in the bank when we returned from our honeymoon, facing the transitioning to the post graduation job market and job hunting. In our three decades being married, at times we sweated bullets on how to afford our kids’ college tuitions, mortgages, and our retirements.

As money-tight as our finance was, we slowly and consistently built our nest egg toward retirement debt-free the old fashioned way, making plenty of mistakes along the way.  We got back on the proverbial horse and practiced our financial habits with consistency, sticking to the lifestyles and financial choices aligning with our retirement goals. While our friends sent their children to private schools, we supplemented our kids’ public education with art and music lessons, and when help was needed with math and chemistry, we paid for their tutoring, so I wouldn’t say that we were frugal, just making conscious choices on our family spending priorities and stayed disciplined on our financial goals.

In brief, there are three most important lessons I have learned and practiced post college to build a debt-free retirement for us and would like to pass along to every young person who’s starting out their lives and career:

  1. The tried and true “Pay-Yourself-First” concept.  For example, save at least 10% of our income before budgeting other expenses. Pay ourselves and opt for the DIYs instead of paying someone else for their services or products; think coffee, lunch, happy hours, etc. Opt for automatic saving deposit of our paychecks, side hustles/gigs for a painless.
  2. The financially powerful “Dollar-Cost-Averaging” investment strategy to reduce the risks of the money we consistently, diligently, and patiently save while time works its magic with “Compound Interest”, and don’t sweat the erratic stock market since you’re young and have time to reap the benefit of this strategy. “According to historical records, the average annual return for the S&P 500 since its inception in 1928 through 2014 is approximately 10%”.
  3. The “Live Within or Beneath Your Means, in another word, don’t outspend your income. It’s tempting to blow our bonus check, overtime pay, or money gifts from relatives because “we deserve it”. I get that and I’ve been there. However, let’s reframe it and focus on the ultimate and delay gratification of financial freedom and retiring debt free.

Today, I still drive my thirteen-year-old Toyota Camry, which is in great shape with almost 300,000 miles. I choose to wear my natural gray hair, do my own nails, make most of my skincare products, and walk daily with my husband for exercises instead of paying gym memberships.  We all have our reasons for our spending habits and I’ve modified mine to avoid the financial cascading effects of each choice without judging others.

While everyone’s situation is different, I humbly suggest, from the perspective of someone who started out with practically nothing, to the Millennials or anyone who’s looking to save, as tough as it is, pay yourself first, do it consistently, start now, and have a budget so you don’t spend more than you earn. It’s a cliche, but it works, skip the $3.50 cup of coffee every morning and brew your own for work, that’s a whopping $17.50 a week and $70 a month. Put this saving toward your Individual Retirement Account (IRA) or 401K with employer matching. Do this consistently and do it now to let it grow so you can enjoy a comfortable retirement. While this doesn’t help with the college debt, the rising costs of homes and weddings, it helps with the most important part of being financially fit, it’s developing a solid habit to invest in yourself, not keeping up with your friends, your neighbors, or some random personalities on social media in their expertly curated images.

In retrospect, our budget DIY (Do It Yourself) wedding 32 years ago has taught us many things about finance and living within our means. We started our lives debt-free, setting the tone, direction, and disciplines to approach our new life together with the expectations that we would work hard, spend wisely, and have a fruitful, enjoyable down-to-earth life without feeling robbed of joy while working toward a debt free retirement.


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