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You can save for retirement — even as a young journalist making $18,500

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Below is an excerpt from the collective, Poynter’s color reporter’s bulletin for color reporters and our allies. Subscribe here to get it in the mail on the last Wednesday of the month.

Rule no. 1: It’s not what you make but what you save.

That’s what my parents always told me as a child. My mother graduated from the first generation of college. She paid for it herself, working and riding the bus until class. She and my father were the first generation of African Americans living in the north, the products of parents who migrated from the south during the Great Migration. My mother had a great career as a senior systems analyst, and my father is a financial planner. They both finished their finances. So I grew up hearing about the stock market.

But starting as a multimedia journalist earning $ 18,500 trying to pay his own bills, it seemed impossible to save. After all, until then I had lived abroad in Colombia as a Fulbright Scholar and I really loved shopping and traveling. I thought I would save when I made decent money. Well, my idea of ​​decent money was getting bigger and bigger as my savings stood still.

Looking at Edward Jones’ pension savings calculator now, I realize that I would only invest $ 1,800-2,000 a year in my 401 (k), starting when I started working full time at age 22 and continuing like that, I would have savings of about half a million dollars to retire by age 62 . That is if my investments achieved a rate of return of 8%. That $ 1,800 a year is equivalent to $ 150 a month.

It is true that I was stubborn. And I hope to save you a little pain. My parents encouraged me in my ear to save for retirement. But truth be told, they have never broken it down like this. That’s why I wrote this article. I want to show you that it is possible to save for retirement and still live a great life, even if you start with a meager journalistic salary.

One of the main ways to save money is to wear natural hair. If your hair is straightened once a week with $ 65 per pop, you could save $ 260 a month. So if you can find a way to cut hair meetings, that’s money you could save towards retirement. Or negotiate with your employer to pay you all the hair costs.

You could also reduce the number of dresses you buy. I remember when I started working in TV news, I wanted to impress viewers by wearing new clothes every day. But that was not necessary. Save on clothes by arranging for a clothing supplement and staying within that amount. You can also save by shopping at discount stores like Burlington and Ross, consignment stores or Goodwill in affluent neighborhoods, Dillard’s Clearance, Poshmark, Amazon or some of the clothing rental companies like Rent the Runway, Stitch Fix and Le Tote.

The more you save on clothes and hair, the more you can afford to assign your 401 (k). It is a good rule of thumb to assign at least the same percentage of your salary as suits the firm. For example, if a company matches 6% of your salary, allocate 6% of your salary to your 401 (k). This means that 6% of your salary goes into retirement, and the company gives you an additional 6% to retire. That company match was free money that I left on the table in the early days. Of course, in many cases, company company is offered only if you stay long enough to be what they consider acquired.

This is something to consider when climbing the ladder in the news. You should consider what you will do with your retirement portfolio when changing jobs. When I finally paid attention to my retirement account that I had transferred to the Roth IRA and invested in it, it doubled in value in four years.

When you switch jobs, you usually have four modes of operation with your 401 (k). According to investment house Edward Jones, you can keep money in your former employer’s 401 (k) plan if allowed, transfer money to your new employer’s 401 (k) plan, transfer money to a traditional or Roth IRA, or cash a 401 (k) account and face tax consequences. Consult a tax advisor and financial planner to decide which option is best for you.

The advantage of turning your 401 (k) into a Roth IRA, according to financial advisers Edward Jones, do you pay income tax today when you may be in the lower tax bracket, not when you are withdrawing funds in retirement. However, you must be sure that you will be able to pay these taxes in the year you make the transfer.

Unlike in the past when you had to pay a commission for each trade, it is quite simple to automatically invest monthly in mutual funds and trade through a brokerage account free of charge.

Some of the benefits of mutual funds, according to CNN Money, if they help you diversify your portfolio, come with professional money managers and often pay a distribution or payment of capital gains, which is basically free money given to you at the end of the year as a shareholder, say advisors at Nationwide Insurance.

When I use the Fidelity or Robinhood apps, I can buy stock shares. That means I can take $ 5 and buy a piece from Apple or Tesla or any company I choose. All these investments add up.

To select stocks to buy, I recently started using the Yahoo Finance app. This app contains articles about companies to invest in, 52-week high and low stock prices, and price history charts. Some shares pay dividends, part of the company’s earnings that are given to you. It is basically free money that is distributed to you because you are a shareholder.

Remember that investing is a way of life. Make sure your money works hard so you don’t have to work so hard.

Subscribe to The Collective to access the subscription function only: our advice The Council of Truth-tellers.

The team supports TEGNA Foundation.

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