Retirement Stewardship in your 20s


If you’re in your 20s and perhaps just out of college or in your first “real” job, you may be thinking, “So, what exactly does all this stuff about retirement stewardship have to do with me?  Isn’t this really only important for older people who are getting close to retirement?”

Well, the short answer is a big N-O; it’s just as important to you as it is to the older crowd, in some ways, more so. The wise person plans for their future, no matter how far off they perceive it to be.

In my free eBook, 15 Principles of Retirement Stewardship, one of the principles I discuss is “invest wisely.” And one of the wisest things you can do when it comes to investing is to start early! (In fact, when you invest may actually be more important than how much or even what you invest in.)

As I wrote in the eBook,

Conscientious retirement stewardship actually begins much earlier in our lives than retirement itself.  It begins with our choices and actions as soon as we have our first payday.

In this guest post by my friend Ray Mulligan, he discusses the importance of starting early in being a good steward of whatever resources God has given you to manage (even if you’re in your 20s) and offers some practical help with things you can start doing right now to get on the right track with retirement stewardship. Ray has extensive knowledge and experience in the financial services industry, bringing a unique perspective to this vital subject.

The big picture

Why have a plan for your money in your 20s? You’re young; it is time to live life to its fullest, start collecting possessions, stop eating ramen noodles, and get a car that doesn’t have a hole in the floorboard, right?

It is a wonderful time of rapid growth and change, so much freedom – and if you get a nice job, you will likely have more money than you have ever seen before in your bank account. Fun, fun!

You have to keep in mind that your thinking about your money will be largely formed during this time and that by building awareness and skill, you will create great benefits and flexibility for yourself in the future. Bad habits formed during this time will be hard to shake and change and, from a financial perspective, can really put you in a situation of “playing catch-up” later in life.

(By the way, you can read what “playing catch-up” is all about in Chris’ 6 part series titled “Behind in Saving for Retirement?”.)

Regardless of your age, the basics are still the same.

No matter what your age, you can do some basic things to put yourself in the best position to be able to manage (steward) your financial resources well.

Know what you have to spend (it’s called a budget).

The basic premise of building wealth and having financial flexibility understands how much money you have coming in (revenue or income) and how much you have going out (expenses).

If you don’t have a budget yet, stop reading for a few minutes and quickly write down what you think your net income is every month and then start a list of items you spend money on every month. Start with the big items – rent/mortgage, food, transportation, cell phone, etc. Then add all of the other items that you have a monthly payment for – utilities, gym membership, etc. Now add in the periodic expenses such as insurance payments that do not happen every month but come due every so often.

What do you have left over? Anything? If you don’t, you need to look at that long list of expenses and determine what you can live without. Cut down on the eating out, discontinue that gym membership that you haven’t used in the last three months, and then let’s pick up this conversation again. It is hard to save money when you are spending more than you make.

If you do have money left over – then let’s talk!

Don’t increase your spending just because you increased your income.

Usually, after you land that first job, your pay will increase pretty quickly if you work hard and do a good job. That’s great news! However, a common temptation is to grow your expenses as your income grows, or worse, go into debt because you are expecting your income to continue to increase — so you “buy now and pay later.”

A great habit to get into as you move through these years of increasing income is, every time you get a pay bump, to increase your expenses a little less than your increase. This creates a nice cushion between your standard of living and your income. If you continue that pattern over 5 or 10 years, soon, your cost of living will be 20 to 30% below your income – that will give you all kinds of options in the future.

Learn to live below your means, even small means.

“How can I possibly do that?” you ask. “But, you don’t understand!” you say. I don’t make that much, and there are so many things I need. Do you think it is going to be any different when you make $10,000 more a year? How about if you double your income? Do you think it will be easier to feel like there are things you can live without? No, the reality is that no matter how much money you make, there will always be things that you can spend your money on. If you learn to live on less than you have now, you will be training yourself to save; more importantly, it will give you options to have less financial stress, more options, and more freedom to pursue your dreams and whatever God has called you to.

But I don’t have any finances to plan!

The conviction to live below your means starts when you deliver newspapers, babysitting, or working at Chick-fil-A. If you have a “work to spend” mentality, you will become a slave to stuff and never feel like you are getting ahead. That’s because as you earn, you spend, so you work some more and spend more. What you desire is more than you want to wait for, and, presuming upon future earnings, you get into the debt trap. It’s a vicious cycle that never ends.

The less you have, the more important it is to be careful with your money.

It is straightforward: The less you have to deal with, the more careful you need to be with what you spend. When you don’t have much, you don’t have a margin for error. A medical issue, a car repair, or any other unplanned financial emergency can financially put you in the hole. You have to learn early to create a cushion by living within your means, or you’ll find yourself in a bad place. That’s one of the reasons why you hear so many people telling you that you need an “emergency fund.”

There are so many other things that are demanding my money’s attention!

So, when do you think this will not be true? There are multi-billion dollar industries called marketing and advertising trying to convince you that you will find happiness, acceptance, respect, and satisfaction in things. If you have lived long enough to accumulate a few things, the reality will hit you; there is always an “upgrade” available to whatever you currently own. If you can learn contentment with what you have and resist the call for upgrades, you will find yourself living more simply, satisfied and joyful, and able to focus on the important things in life – people, not things.

What about my debt?

Many people in their 20s have debt, including school debt, credit card balances, car payments, etc. When you are in this situation, there are a few strategies that you want to employ. There is no “magic bullet,” but here are a few things you will want to keep in mind:

  1. Don’t take on any more debt. Duh – seems to make sense, right? You ultimately want to be in a position that you are getting paid interest, not having to pay. (Better to get paid than to pay, don’t you think?)
  2. Determine how fast you can realistically pay off your debt. You certainly want to tackle those high percentage rate credit cards first. It is the best risk-free return that you will ever get on your money.
  3. Determine a way to save something by forgoing something that you would normally buy but can live without. When I was first married, money was very tight. We had some student loans to pay off, and we were expecting our first child. We made a decision that we would not buy disposable diapers but instead use the old fashioned cloth ones and wash them ourselves. This saved about $30 a month, which isn’t a lot, but we put that $30 a month into a savings bucket and knew that every time we pinned one of those diapers, we were doing what we could to stay out of further debt and start a lifestyle of savings. I don’t know what those things are for you, but you’d be amazed how it adds up — a few dollars at a time over weeks, over the years.

Why is it so important to start early?

The most important reason for starting to save early is called the “power of compounding.” Some even call it “magic.”

“Compound interest is the eighth wonder of the world. He who understands it, earns it … he who doesn’t … pays it.” (Albert Einstein)

This “wonder” is when your money is earning money, and the money you earn on your money is earning money. You may be tempted to think that it’s not really all that important, and you can catch up later, but let’s look at the numbers…

There are three people that all had a different perspective on this subject:

Susan ​ – who invested $5,000/Year from 25 to 35, and then stopped for a total of $50,000 total invested​

Bill – who got started a little late, because he didn’t read this blog, and invested 5,000/Year from 35 to 65​, for a total of $150,000 total invested​, and

Chris​ – who was committed to living below his means and invested $5,000/Year from 25 to 65​, for a total of $200,000 total invested

Now, who do you think has the most money available in their account at age 65, assuming the same return rate over the entire time period (7% for this example)?

Well, because Chris started early and kept with it, he would have the largest balance —  over a million dollars, $1,068,048, to be exact!

So, who comes in second? Was it Bill who invested $200,000 or Susan, who invested $50,000?

The answer is Susan! At age 65, Susan will have a balance of $562,683, while Bill will have a balance of $505,365! How can that be, when Bill put in three times the amount as Susan? Well, it is because Susan’s money had a running head start and started growing 10 years earlier than Bill’s. Instead of taking money out of her income every year, she allowed her money to make money for her. This can be seen in the following chart:

Graph: Courtesy JPMorgan

You see, by starting early and sticking with it — living below your means – you position yourself to pursue options God will bring your way. You will have opportunities to give, opportunities to bless others, and maybe opportunities to provide great value to organizations without having to be paid great salaries. That is why it is worth it to skip a few lattes, drive that car for another year, or live without the latest phone for a couple of more versions!

Trust me, 30 or 40 years from now, you’ll be glad you did!

A final note: In addition to the suggestions in this article, you may also want to look at the Checklist of Actions for those between ages 20 and 35.


👋 Hi, I’m Chris Cagle, the founder of Retirement Stewardship, a blog that focuses on the various aspects of retirement from a Christian stewardship perspective (1 Peter 4:10).

I write as a retiree who is dealing with the things I write about. I base most of the articles on my research and experience applying it to my situation and how it might apply to yours.

If you’re new here, check out the site introduction for an overview. You can also learn more about me.


My Books

Redeeming Retirement: A Practical Guide to Catch Up (2021)
The Minister’s Retirement (2020)
Reimagine Retirement: Planning and Living for the Glory of God (2019)