Due to lack of experience, young workers often don't know which bills are most important. This obstacle sometimes prevents them from saving.
To make your money stretch, author Nicholas Aretakis recommends prioritizing your bills, placing absolute must-haves first, such as rent, health insurance and groceries, then ranking secondary expenses, such as credit card debt, car payments and student loan payments, in order of highest to lowest interest rates.
When factoring in money for retirement, Aretakis encourages those under 30 to consider the investment returns they'll miss out on by not contributing early -- stocks historically averaged 10 percent over the past several decades. They should also consider the tax savings they'll gain (28 percent on average nationwide) by throwing money in now.
"It doesn't make any sense to pay down (student loan)
debt to save 7 percent on interest (the average maximum interest rate for
most federal student loans) when the common 401(k) plan returns an average
of 28 percent of your investment and that's before any employer matching,"
"Pay down your credit card debt right away. Then contribute
everything you can to retirement."