After a presentation John Berry gave last week, a man who knew we worked together came up and asked a question:
"How do I deal with the competing priorities of needing to save for a down payment and getting started with my retirement account?"
The conference attendee, who was in his mid-20s, gave me a brief overview of his family's financial situation, including goals, debts, and income.
Clearly, the house and some student loan debt at high interest were top priorities, but I challenged him:
"You should open an investment account as soon as possible. It could be your supplemental savings plan, or your wife's 401(k), where she may be eligible for an employer match. I want you to put an amount in it that you will never miss—$50 per check or even $10. Enough to get matching dollars if you can."
This is not "splitting the baby"—a compromise where the family pursues multiple goals simultaneously, thereby taking longer to accomplish anything.
My advice in this case, and in many similar situations where a younger person knows they need to invest but has other pressing needs, is simply to get started in a small way. Open an account, to which you can contribute more later.
I still have the first dollars I contributed to a Roth IRA, which I opened more than 20 years ago. I didn't add much for several years, but I contributed when I could. And it was already open—the mechanism and the habit established—when I was able to up my contributions.
This is behavior-forward financial advice. The outcome has nothing to do with numbers.
Similarly, it is logical that if you don't exercise but know you need to, you should consider walking around your neighborhood 3-4 times a week rather than joining a gym. Walking is a low-cost, low-entry way to get started exercising. It's way better than nothing, and once you've established the habit of setting aside the time to exercise, then you can level up and join the gym.
Without understanding your situation, or that of a child or grandchild, I can't tell you that opening an investment account now makes sense. Only a deeper discovery process can reveal your next best step.
Nevertheless, making modest, and feasible, moves toward your goals is usually a great idea!
Beth Henary Watson is both a CERTIFIED FINANCIAL PLANNER™ and Accredited Behavioral Finance Professional™ certificate holder.
Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual.