USA Today Young Investor Series, Part 2

This Millennial lives for today but builds her 401(k)
Tanisha A. Sykes, Special to USA TODAY

Zoë Dawkins loves to live for today.  The 28-year-old communications specialist at Indeed.com, an online resource for finding job listings in Austin, says, "I really value the idea of 'happiness now', so I spend a lot of my money on travel, entertainment, and gifts."

Dawkins is the quintessential YOLO, a term coined by Millennials, short for "You only live once." It makes sense, especially since she grew up in a family that valued having experiences over saving for the future. "My Mom changed careers so many times throughout my life,” Dawkins explains. “She would give up an entire business based on whatever she wanted to do, and just take off and go to Thailand."

While some view that behavior as flighty, Dawkins sees it as freeing. “It made me realize that I could do anything!” she says. But before she began dating her boyfriend, who is also a financial adviser, money was flying out the door. “There have been times when debt has mounted up, or I wasn’t able to bail myself out when a medical crisis hit,” Dawkins says.

After working with him to fix her finances, she set a budget and began putting money into a 401(k).
Now, instead of spending thousands on a lux jaunt to Bali, or hitting happy hour daily, she tracks her weekly expenses using Google Sheets, which allows users to create and modify spreadsheets and share the data online. “Working with a financial adviser who understands my priorities and outlook on life has been incredibly helpful,” Dawkins says. "He gives me a lot of insight into my own spending and has taught me that saving/investing doesn’t have to be burdensome; it can be freeing."

Dawkins' budget includes $1,000 a month for food and entertainment, $500 for travel and $350 for gifts. And in January, she started automatically investing $400 a month in her company’s 401(k) plan. On top of that, Zoë's company matches 50% of the first 6% of her 401(k) contributions. She also has $10,000 saved in an emergency account. "It's nice to know that saving smartly and living a full life don’t have to be mutually exclusive,” she says. “Not only can they co-exist, but they can also lend to one another when properly informed."

Even so, she knows she’s being a bit skimpy on saving for retirement. Dawkins says she will likely invest more once she gets promoted and earns a higher salary. But at the same time, “I don’t regret any of the things that I spend my money on or all of the adventures I have had,” she says. “I want a life that burns with passion, and I feel I have that." Her best advice for other YOLO investors is simple: “Keep the balance,” she says. “Decide what you really need to be happy and what you need to do to be secure. Then, set those things up.”

Russell Robertson, a certified financial planner and owner of ATI Wealth Partners in Atlanta, says that Dawkins was setting herself up to be in a bad financial position. "Before Zoë met with an adviser, there was a tendency to spend a lot with no real emphasis on saving, aside from a cursory amount,” he says. Like Dawkins, there are steps that YOLO investors can take to start putting aside money for the future without giving up their lifestyle. Robertson offers this advice:

Save separately for emergencies: A lot of life is planning for the unexpected. Dawkins is saving more now for emergencies, but Robertson would like that money funneled to a dedicated emergency fund in an online bank like Ally, Capital One, or AMEX. “If your car breaks and you suddenly need $3,000 or $4,000, you’re not going to be able to take those road trips you planned,” he says.

Build toward life goals: For YOLOs, it’s difficult to commit to saving for retirement because it feels like a nebulous thing. “I try to frame it as not this big construct,” Robertson says. “We’re not just saving for retirement, but also for starting a family, buying a house, or taking a really lavish European vacation.”

Live beyond the moment: Robertson tries to convey this message to his YOLO clients: “Yes, this moment is important, but temper that with a little bit of FOMO for the future,” he says, referring to fear of missing out. You may have a great day today, but if you lose your job tomorrow, now what?

Make saving unconscious: Sign up for automatic deductions in the company 401(k). As a rule of thumb, Robertson advises people to save 10%-15%. “Start with 8% of your income, which is equivalent to contributing approximately 13% in your 401(k) because of the company match,” he advises. If you don’t see the money coming out of your paycheck, you’ll never miss it.
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Don’t be embarrassed by your budget: If you make saving unconscious, make spending very conscious. Write down everything you spent in the last month, categorize it, and follow that month to month. “You don’t have to adopt Draconian measures,” he says. If you overspend, address where and why. Creating a written budget makes you aware of what you’re spending on and helps you to conceptualize the bigger picture.