Every other week, we deliver Young Money, a newsletter on young people and economics that you’ll actually want to read, to your inbox. In it, we include personal finance tips–The Word–from experts on subjects that are actually relevant to you. You can find the most recent edition of The Word in your inbox (sign up for Young Money if you haven’t already), and we’ll archive previous editions here.
Today’s word: retirement. Whether you’re just starting out in a job or you’ve been at it a while, figuring out how to save for retirement is tricky, especially if you have student debt. We asked one of our favorite student loan gurus, Rohit Chopra, whether it’s better to use extra cash to pay down your student loan faster or if you should put that money in a retirement account. Here’s what he told Young Money:
- Don’t miss out on your match. If you’re lucky enough to have a job that matches your contributions to a retirement plan, don’t miss out on it. Rohit tells us that this is worth it even if you have a lot of student debt: “free money, plain and simple.”
- Set it and forget it. Hopefully, you have some wiggle room in your budget to save for retirement. Rohit recommends the rotisserie chicken method. Set up automatic deductions through your employer or auto-debit for other retirement plans. Automating your investing will allow you to keep building up your nest egg over time.
- Listen to your stomach. No, this doesn’t have anything to do with the rotisserie chicken method. A lot of Millennials are squeamish about shouldering so much student debt. There are lots of good tax advantages to saving for retirement rather than paying off your student loans early, but if your student debt makes you sick, make some extra payments to pay it down faster. If you go down this path, check this out.
Today’s word: salary history. That was two words, I know. But it turns out those two words can have a huge impact on your life. When potential employers ask you for your salary history in an interview or application, they’re tying your future earnings to your past wages, likely using your old salary to reduce their offer to you. That’s bad news if you’re a person of color, a woman, or a Millennial (or, god forbid, all three). You can check out more from us on why asking about salary history harms young people here, but if you’re really just looking to find out how to avoid getting tied down to lower wages than you deserve, here are some tips:
- If a job application asks you for your salary history, you can leave it blank, enter $0, or put “N/A.”
- If in an interview a prospective employer asks you for your salary history, you can instead answer with your salary expectations for this job—and then hold firm.
- For various reasons, not everyone can push back on salary history questions, and that’s totally fine! You can still try to curtail the practice by supporting legislation at the state and federal level that would ban would-be employers from asking about salary history.