DES MOINES, Iowa -- Saving for retirement can be a daunting task, especially for those who are in their early 20s and living paycheck to paycheck. But one 20-year-old University of Northern Iowa student, Alex Smith, has a website that may help teach you how to save and plan for early retirement. Smith has an aggressive plan to retire a millionaire at 30-years-old.
“The mathematics behind investing, or retiring early, tell me that if I save 60 to 65 percent of my income, I can retire in approximately 8 to 10 years,” Smith said.
He has created a website called Wealthy Diligence with his own blog posts about investing, retirement planning and money management. And as an example of what to do, he puts his own financial statements on the website.
“So, I tell you exactly how much I’m making, how much I’m spending and then at the end of the day what my net worth is,” Smith said. “It gives kind of a source of hope and inspiration to people that may be in similar circumstance.”
He began planning this website after a financial planning class his freshman year. There he learned the average American only saves 5 percent of their income each year. He said with a savings rate of 5 percent, it takes roughly 80 years to save up that money to live the same standard of living for retirement. This is why he thinks it is so important for people his age, in their 20s, to begin saving now.
“What really makes this terrifying is your early ages. Your early 20s are the most pivotal, important times of your life to be saving for retirement because you miss those years of tapping into compounding interest,” Smith said.
He said a big part of saving money is physically setting it aside, but another aspect is how you spend your money. One thing he stopped spending his money on is a gym membership and created one in his basement. Another huge throw away expense is coffee, so he brews his own every morning.
Smith said the reason people don’t save as much is because they feel like they are losing something.
“They think, ‘that’s money I don’t have,’ but you have to adjust your perspective and your mindset and say, ‘no I didn’t lose that money, I’m just paying myself for a rainy day in the future or for my retirement in the future,” Smith said.
When it comes to paying off debt, specifically student debt for people his age, he said to begin paying off the debt as soon as you can before you can start saving your money. You can read more on his website at WealthyDiligence.com