2.0somethings

Many of us know we should be investing. We have read countless stories or have gotten earnest talks from our parents. We look at a nation that is helplessly in debt and vow, “not me!” But we know that we should be investing in the same vague sort of way that we know we should work out, call our grandparents or not drink until 3 am on a Tuesday.

I haven’t started investing yet. After I factor in my other costs (student loans, ramen soup) I figured the costs were prohibitively high. My general understanding was you needed at least $1000-2000 to start investing. I was totally off. There is a great article in USA Today that details how even the completely broke can start investing.

The American Funds, for example, is the largest broker-sold fund group in the nation. You can invest in most of its funds for $250.

A few funds will let you start with $50 via an automatic investment program, or AIP. An AIP allows the fund company to tap your bank account on a regular schedule. You promise to keep investing until you reach the fund’s normal minimum.

But if you keep going, and increase your contributions regularly, you’ll have some decent savings. Had you started with a $50 a month investment in the fund 20 years ago and increased your contribution by 5% every year, you’d have about $45,500 now — certainly not enough to retire on, but enough to make a down payment on a vacation home.

Very cool. Most of us can probably swing $50/month. One other tip is to check to see if your office offers a 401k. You can contribute as little as $10/month pretax which is then invested for you. Many employers also offer employee matching — the company matches every dollar you invest up to a point. That is FREE MONEY. Many younger 2.0somethings won’t have worked at a company long enough, but it is worth looking in to.

• USA Today via Free Money Finance

I have gone back and forth as to whether carrying cash is more conducive to saving money. Some people argue that carrying cash makes them more likely to buy little things (lattes, magazines, etc) that make your savings vanish so quickly. Others say that having cash on hand lets them tangibly see how much they are spending and budget accordingly.

However, one incident last weekend made me institute a new rule for myself designed to save money. Always bring cash to a bar. I was out for drinks with some coworkers when I went up and ordered a pair of beers for myself and a friend. I was handed my beers and I gave the bartender my debit card. “Oh, there’s a $30 minimum,” she said, looking significantly at the two beers I already had in my hands. I kept the tab open and ended up buying a round for my coworkers. They enjoyed it, but I would rather had not spent $40 on quick after-work drinks.

Since then, I have always made sure I have had cash when I go to bars (at least I try to). I am finding that it makes my time at the bar quicker, makes bartenders like me more (tipping $1 a drink rather than 15% at the end) and is cutting down on drink creep (ordering more and more as the night goes on).

The New York Times latest article in their “Young Folks: What’s the Deal?” series profiles the growing trend of friends discussing salaries openly - “the last taboo in American life,” writes Alex Williams. There are a few theories bandied about as to why this is, including the existence of a “bunker mentality” among the debt-saddled. Then there’s the strategic angle, described by Salary.com’s Bill Coleman:

This is a generation that is much more attuned to teamwork, collaboration and sharing information [...] Everything they do is a kind of group event. How do you know, when you get your first job offer, if $45,000 is a good offer, a bad offer or an O.K. offer? You go to your friends.

As a 2.0something a week away from becoming a college graduate, I can attest to the truth here. As myself and my friends have been lucky enough to get job offers, we’ve openly shared the information so that the others can get a feeling for what they’re getting into - and, sure, to crow a little as well.

Of course, all of this pales in comparison to Italy, where last week an outgoing government official took it upon himself to post Italians’ tax returns online. All of them. Furor swelled, but maybe we’d all be better off with a little more transparency.

• NYTimes: “Not-So-Personal Finance”