You might have heard an absurd-sounding parable that often makes the rounds on personal finance blogs. This story is about two siblings who want to have a comfortable retirement — let’s make them sisters for this article’s purposes.

The first sister starts saving in her 20s and manages to save $100,000 by the time she turns 30, but then never puts another dollar towards her retirement. The second sister waits until she’s 30 in order to start saving for retirement and then puts away $10,000 every year until she turns 65.

The story is meant to showcase the power of compound interest and saving early for retirement.
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It sounds pretty incredulous but the math works out. If you assume the sisters invest at a 7% rate of return, the younger sister is going to have $1,150,615.18 when she retires while the older sister will have $1,065,601.21.

It’s a nice story.

But nowadays with so many 20-somethings drowning in student loan debt and having a hard time finding a job, it might sound impossible to them to save $100,000 by the time they’re 30. That doesn’t mean the story doesn’t apply to them!

You don’t have to reach that magic number in retirement savings by your 30th birthday. After all, this parable is meant to inspire people to start saving as much as possible as early as possible.

So, let’s say you do want to try to save $20,000, or $50,000 or even $100,000 by your 30^th birthday? Here are some tips to do it.

1. Go to a Cheap School

Choosing a cheap college or the one that gives you the most money in scholarships is key. Unless you plan on going into a career that will pay you enough to quickly pay off your student loans and guarantee you a job as soon as you graduate, it doesn’t make a lot of sense to go deep into debt for college. There are a lot of ways to reduce the cost of college and ensure that you graduate with a low amount of student debt.

For example, there are financial planning techniques that you and your parents can use to ensure you qualify for more financial aid. You can also choose to start at a community college and transfer to a four-year university during your degree. Living at home while going to school could be an option for some and would save you a significant amount of money.

2. Avoid Credit Card Debt

While it might be impossible to completely avoid student loan debt, it is often possible to avoid credit card debt. Many people choose to live above their means and use credit cards in order to supplement that. This leads to a vicious cycle of high interest-finance charges that can lead you further into debt (this calculator can help you figure out how long it’ll take you to pay off that credit card debt). Those drinks that you bought two years ago and charged to your credit card will end up costing you a significant amount of interest by the time you actually pay them off. The ideal way to use your credit card is by putting purchases on your card that you’ve already budgeted for and then pay them off at the end of the month — this helps you build your credit while keeping you out of debt.

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3. Live Like a Student

I’ve seen a lot of my friends leave college and get a job only to significantly increase the amount that they spend. While they were adept at being thrifty to keep their costs down while they were in college, once they left they found themselves living paycheck to paycheck. Just because you leave college doesn’t mean you should stop living like you’re in college. Get a roommate, take public transit if possible and live frugally. Commit yourself to saving as much of your income as possible every month and put any pay increases towards your savings.

4. Take Advantage of Retirement Matches

A retirement match is like getting free money. Sure, you have to invest some of your own money into your retirement account in order to get it but many employers will match your contributions up to a certain percentage of your annual income. This is an absolute no-brainer. Make signing up for your company’s 401(k) or IRA matching program a priority on your first day at any new job.

5. Get a Second Job or Side Hustle

If it’s okay with your employer, find a way to make a little extra money on the side to supplement your savings. I’ve done things like take on freelance writing jobs, tutor, or help companies develop engagement strategies. You can also do things like start a blog or sell things online.

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6. Take Jobs With More Responsibility

The best career choice that I made was to take a job that paid me less but that provided me with significantly more responsibility right out of college. By gaining leadership experience in my first couple of jobs, I was able to very quickly double my salary. Meanwhile, I know people who took better paying jobs with less responsibility and have had to toil for years working their way up the ladder. While it might sound counterintuitive that you’ll be able to save more by the time you’re 30 by working in jobs that pay less right out of college, you may find that employers will pay you more within a couple of years due to the experience you gain.

7. Don’t Be Afraid to Change Jobs

Millennials have a bad reputation for being frequent job switchers. Changing jobs, however, has been the best thing that I have done in my career. By looking for my next opportunity and making a switch, I was once able to make over $15,000 more per year. Just be sure not to switch jobs too often as some employers will be afraid of hiring you.

8. Say No

One of the hardest things about trying to save in your 20s is that you’re going to have to say no to a lot of fun things that your friends will invite you to do. If you do say no, you’ll be much better off financially the long run, but you might feel like you’re missing out in the short-term.

By keeping your eyes on the prize and knowing that because you’re saying no you’ll be more likely to be safe and secure throughout your life, this might make you feel better. If it doesn’t, just suggest an alternative. Instead of going out, host a potluck or party. You could have just as much fun and save money.

9. Set Short-Term Goals

Instead of thinking about saving $100,000 by the time you’re 30, think about saving $10,000 by the time you’re 23 and $20,000 by the time you’re 25. By creating annual and biannual savings goals, you’re less likely to be overwhelmed by the big number and give up. Remember that you’re more likely to make more money in your late 20s than you are in your early 20s, so expect to save more then.

While it might seem impossible to save $100,000 by the time you’re 30, if you follow these steps and end up debt-free with $10,000 in the bank — you’re going to be in a much better place. Saving $100,000 by 30 is a stretch goal that not everyone is going to be able to meet. After all, you might currently be 25 and have $100,000 in student loan debt.

The moral of the story about the two sisters is not necessarily that you need to have $100,000 by 30, so much as it is to point out that the financial choices you make in your 20s will affect you for the rest of your life. By setting yourself up to make good financial choices while you’re in your 20s, you’re setting yourself up for a much easier financial road ahead.

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