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This month I am hosting a couple evacuated from the Iran/US war zone. They each (ages 40 and 29) have been saving money, but not systematically, and asked for some coaching on how to get their affairs organized.
We’ve had one session so far. Here is what we covered:
– Understanding that 15% of gross income should be saved for retirement.
– First, set up an emergency fund. (How much, why, where, have all been covered)
-Second, track spending. (set up a tool similar to Monarch.com so expenses can be examined to plan your future retirement savings)
I’m thinking about what will be next. I’d welcome suggestions of topics I should cover while I have them here with me, and paying attention.
Minimize expenses. DVDs from library, no streaming. Cook at home don’t eat out, library books not bought.
Buy as little as possible. Borrow as little as possible. If they get a credit card pay it off every momth and get on with the rebate.
Another member posted a link to this Grandmother’s blog who is poor but manages, mostly with home canning, food pantry donations etc. Lots of useful advice.
https://nanaisfrugal.wordpress.com/who-is-grandma-mama/
I think what was mentioned is most important. One of the challenges is managing lifestyle creep. Tracking spending can lead to budgeting and that is a means to that end. I’d add that it is important to avoid debt.
Sticking my neck out once again, 15% savings to start, good. Emergency fund, right.
But if those two are accomplished why the need to track spending – with the understanding any credit card spending must be paid in full at months end?
What does tracking spending add to the process? Following the above guidelines guarantees wealth accumulation does it not?
I would add one additional step and that is to increase saving rate with each increase in income. It doesn’t have to be a full percentage if increases are modest, but something, perhaps saving anything from above base pay will help.
Why track spending? Managing lifestyle creep is one reason.
This all would seem unnecessary for older people in the situation with adult, independent children, little or no debt and a paid-off mortgage, established retirement plans and access to social security benefits or pensions. For younger workers the situation is very different.
Frankly, managing personal finances and saving something, anything, consistently seems most important to me. I’m coming from the position of someone who had zero retirement savings at age 49, had a negative cash flow and was in debt. How I got into that situation was not entirely of my own doing and that isn’t the issue. Building a new life out of the ruins was my challenge.
While 15% can be a difficult savings goal, it is one of the reasons I suggest avoiding debt. Now, we could argue about good versus bad debt, but all interest paid on debt is diverted from savings.
“Many younger workers are entering adulthood in a high-cost environment, where rent, groceries and insurance take up a larger share of their income. At the same time, student loan payments have resumed, and building emergency savings often feels more urgent than long-term investing…….
There is also a structural shift underway. More Gen Z workers are earning income through freelance work, gig jobs or contract roles, positions that typically do not come with employer-sponsored retirement plans. “ – Kiplinger 4/9/2026
However, starting young (age 23) and saving $3,000 annually and consistently will build a $790,000 portfolio by age 65 at 7% annual return. An employer match obviously increases this. Note that $3,000 is 15% of a $20,000 annual income. It would seem this is a realistic goal IF earnings cover expenses. Lower income or an inverted financial situation (high expenses) requires expense tracking. Eventually, as expenses decrease, progress to budgeting. Why? Because lifestyle creep is one way to sink a financial plan.
According to the Fidelity Q4 2025 retirement analysis, “the average 401(k) balance increased to $304,200 at the end of 2025, a 16% increase from the end of 2024” For workers with the same employer for 5 years. The 401(k) savings rate held steady at 14.2%. Gen X workers maintained their savings rate above 15% while 13+% Gen Z increased their savings rate.
“Gen Z workers are saving at a total rate of about 10.9% of income when employer matches are included, also based on the Fidelity survey, which is not far off from older generations.”