Should I start paying attention to my 401K? I know it’s important, but I don’t know what it is!

I like to say that the three most powerful words in all of personal finance are “start saving now.” The money you save early on has the most power to grow through compounding. While you are in college funds, are frequently tight. So, at this stage in your life, start flexing your savings muscles by setting aside a set amount each month–it can be as little as $10. It’s critical to just start the habit.

The hardest part about saving in your 20s is that it’s so easy to feel after all the hard work you’ve put in academically that it’s time to live it up. It’s easy to look at the (often lush) facilities on college campuses or how our parents are living and to want that lifestyle right out of the gate. Yet it took our parents decades of hard work to earn the standard of living we saw as teenagers.

The best advice I’ve heard is to literally expect your standard of living to drop when you graduate from college. If you are being diligent about saving at least 10% of your take home pay (and personally I’d love to see you strive for 20%), that leaves you with less room for discretionary spending. The antidote isn’t to deny yourself all joy, but rather to be thoughtful about how you want to spend your money after you’ve set aside that precious savings first.