If you're like many 20-somethings, you're shouldering thousands of dollars in student loans, carry a balance on a credit card and try to make ends meet on an entry-level salary.
So the notion of saving and investing - especially for retirement - may seem impossible or something to push off.
But you may be in a better position than you know. Twenty-somethings have an asset that can be more valuable than cash: time. Money invested today - even small amounts - can grow into big sums over decades.
The important point is to get started, so you can take advantage of these years.
"The power of that compounding over time is incredible," says Lance Alston, a Dallas financial planner.
Consider this math from Alston: Let's say you're 25 and save $400 a month for 10 years and then stop saving. Your investments earn 10 percent a year. By the time you're 60, the $48,000 you contributed has grown to $911,736.
But if you wait to start saving until 35, you would have to put away $1,037 for 10 years - a total of $124,440 - to come out with $911,299 at 60. And you would have to set aside much, much more if you don't start until your 40s and 50s.
Muskee Books, who recently turned 24, is sold on saving and investing. He just wants to know how to get started.
"Most people I know have a minimum of $30,000 and $50,000 in debt," says Books, a physical education teacher at a Howard County elementary school. "I was lucky enough to get through college with my parents helping me out."
Books has other advantages besides being debt-free: He earns $42,500 as a teacher and about another $9,000 as a personal trainer. That's a good income for someone his age. As a teacher, he will receive a traditional pension that will pay him a monthly paycheck for life when he retires. Many employers either don't offer pensions or are doing away with them.
But even those with pensions need to save for retirement.
Pensions typically replace 30 percent to 50 percent of your income during your last year of work, which won't be enough to maintain your lifestyle, says Indianapolis financial planner Grace M. Worley. And pensions usually don't keep up with inflation.
Also, to qualify for a full pension, you need to spend decades with an employer. Many teachers leave the profession within five years. So if Books were to switch careers, any pension benefits he would have earned would be small. Books initially should save like his peers who don't have a pension, says Jan Dahlin Geiger, an Atlanta financial planner.
So for Books, and others in their 20s, here are tips to getting started:
Make retirement a priority: Sure, it's decades away and you may have other debt to pay off, but retirement will be your biggest financial goal in life. Assume Social Security will be around when you retire, despite all the doomsday predictions. It won't be as generous as today.
"If you want to have a comfortable retirement, the number to save is the first 10 percent of whatever you make," Geiger says.
If 10 percent is a stretch now, start with 3 percent or 5 percent. Then increase your savings each year by at least 1 percentage point when you get a raise. The important thing is to get in the habit of saving.
Where to save? Begin with your employer's 401(k), if available. It makes saving easy because money comes directly out of your paycheck and into the investment account. You can set aside up to $15,500 a year. Many employers match workers' contributions. That's free money.
You won't pay taxes on the money upfront, but you will do so when it is withdrawn in retirement. Cash out before age 59 1/2 and you'll owe taxes and typically a penalty.
Books, like others working for nonprofits, has a 403(b) instead of a 401(k). The plans are similar, although he doesn't get an employer match.
If your employer doesn't offer a retirement plan - or doesn't match your contributions - consider a Roth individual retirement account. Money goes into a Roth IRA after taxes have been paid, so you don't get a tax break upfront. But after that, you never will have to pay taxes on this money - even the earnings - when you pull it out in retirement.
"For someone in their mid-20s, that is 40 years of tax-free growth. That's huge," Worley says.
You can open a Roth with an investment company and set it up so contributions are made directly from your paycheck or bank account. The most you can set aside this year is $4,000.
Roth contributions can't be made once income reaches $114,000 for singles and $166,000 for married couples filing a joint tax return. That's another reason to invest in a Roth now. Your income later may be too high to take advantage of a Roth.
Choosing investments: Within a 401(k), 403(b) and Roth, you will have a variety of investment options. When starting off, simplicity is best. And there's nothing simpler than a target-date retirement fund.
You choose the fund that bears the date closest to the year you expect to retire. Someone in their 20s might select a 2045 or 2050 fund. The fund does all the work for you. It will choose other funds to invest in and gradually adjust the portfolio to be more conservative as retirement nears.
Being in your 20s, you can afford to be more aggressive with money that won't be needed for decades. That means your portfolio initially should be heavily weighted in stocks, which entail some risk but yield the biggest returns over the long haul. The typical 2045 and 2050 target-date retirement funds, for instance, will hold 90 percent or more of their assets in stock funds.
If this option is not available to you, Worley suggests starting with a global stock mutual fund that will hold shares in foreign and U.S. companies. "Start with one and build on that for several years," she says. "It's a good anchor fund."
Later, when you get more comfortable with investing, you can always switch your investments if you want.
Other goals: Your biggest debt may be student loans, but that is not the debt you need to tackle first.
"Don't pay off student loans any faster than you have to. The interest rate is probably low and [the interest] is probably tax-deductible," says Stuart L. Ritter, a financial planner with T. Rowe Price Associates. "There are better places to put your money."
One of them is to pay down credit-card debt. Start by not racking up any more charges and always pay more than the minimum payment.
At the same time, slowly build a cash reserve. This will be the money you can use for emergencies rather than credit cards. Start with a goal of setting aside one month's worth of expenses. Later, try to build that to three.
Because you will need to use this stash at any moment, you can't risk putting it in the stock market. Put it in a savings account - not a certificate of deposit - in the bank. Shop at www.bankrate.com for FDIC-insured online banks that pay a higher interest rate than conventional banks.
These online accounts are also a good place to park money if, like Books, you're saving for a down payment on a house in a few years.
All this might sound like all saving and no fun, but it will put you in a far better situation years from now than many in your parents' generation find themselves today.
To suggest a topic, contact Eileen Ambrose at 410-332-6984 or by e-mail at email@example.com.