One of the most valuable classes at Cal that I attended was not an engineering class, nor was it technical. It was UGBA 196, Personal Financial Management. Professor Selinger seared into our brain about “the magic of compounding” and how it is ever so important that managing your personal finance while you are still young will reap benefits orders of magnitudes higher than if you started later.
I’m writing this guide because ever since I took that class, I have learned how important it is to understand personal finance, and that especially for young working professionals, it is extremely important to start saving correctly right now. I am not claiming to be an expert (hardly one) in managing money, and you definitely should do your own research before doing anything. But I hope this is a guide that will help jump-start or help get you on track to managing your money right.
Magic of compounding
First step, think about retirement. My favorite retirement calculator is the AARP Retirement Calculator. It is the most simple and concise calculator to get you to start thinking about how much money you want to be saving in order to reach your goals when you retire. For me, it claims that I need a minimum of $2,827,254 to retire in the lifestyle that I want. However, based on my current savings trajectory (the amount I’ve saved so far and the amount I am saving on a monthly basis), I am estimated to have saved $6,420,432 by the time I retire. I sure hope that is true, I’ll check this article when I’m 67 to see if I actually met this target.
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