I have been reading quite a bit of the personal finance blogs, researching, discovering, making plans to get out of debt. One of the most common things on these blogs, especially the financial independence retire early (FIRE) crowd is that they all started early and made a plan.

What happens if you spend half of your life living in poverty or financial ruin and have to start in your late 40s? Sometimes I think I will never get to where I need to be by the time I retire. You see it all the time, the people that should be sitting on a beach somewhere drinking a cocktail while they spend their last few years enjoying life are working as a greeter at Walmart.

Compound Interest is Real

We all know the advice, The best time to save is when you are just starting out. Put ten percent of your salary aside each month for retirement. If you start when you are 18 you will have more than enough to retire. Dave Ramsey uses a chart that explains compound interest with two investors. One invests $21,600 over 9 years from age 21 to 30, another invests $91,200 over 36 years.

Dave goes on to explain that the person that invests early earns twice as much as the one who invests late. I have explained this in my post “Teach Your Children About Finances.”

The problem with this advice, other than the obvious that the compound interest that Dave calculates is fairly high, most people do not have enough when they are younger to put money into savings. If Americans are one paycheck away from bankruptcy, how will they save for retirement?

Sure, we could all live with our parents for years and save, pay off our student loans, put money into retirement, and walk to work. However, the reality is that most of us get married, have kids, are underemployed or underpaid, and live through a major financial emergency.

Financial Setbacks Happen

Let’s face it, life happens.

The thing is, despite the financial setbacks, you can turn things around. If you have debt, start paying it off now. Start with a small emergency fund of maybe $1000 and put anything extra towards your debt.

You can find ways to save by going through your spending. I never realized how much I spent on eating out until I started tracking it. Between fast food and restaurants we were spending close to $600 a month. Just by cutting that in half we were able to save $300 more each month.

Even with eating more meals at home we were not spending anymore on groceries. Also, convenience comes at a price. Learn how to fix simple meals and do not use one of the meal prep companies. Frozen vegetables, pasta and rice are fairly inexpensive and easy to prepare.

Cut back on entertainment. In the middle of our financial crisis, we got rid of cable and bought an antenna. That saved us an additional $75 per month. You do not need a television for entertainment. Your local library can be a great resource for both movies, television shows, and books.

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Simple Adjustments Can Make a Difference

With just those two adjustments in less than three months time you would have enough for a small emergency fund.

Each quarter you should also be looking at what you have on auto-pay. Do you pay for Spotify, Netflix, Hulu, or other streaming services? Do you need multiple entertainment options? We were paying only for Amazon Prime since it gave us movies, music, and free shipping for a lot of the things we ordered. Redbox is also a great alternative.

You could easily eliminate another $30 just from stopping some of the streaming options. However, if you find yourself going to the movies quite often the cost of streaming is a lot cheaper than what you may pay at concessions.

Once you have the emergency fund you can pay more towards debt. As you watch your debt decrease you will realize how much you pay towards credit cards each month and that can go towards savings.

We are almost at a point where our debt is paid off. With the debt paid off, we can put more towards our savings goal. Not only that but the psychological impact of being debt-free will encourage you to save more.

Where To Put Your Emergency Fund

Your emergency fund should be in high yield savings account like Ally or Marcus and you should build that initial $1000 to at least three months of expenses. The good thing is that once you pay off the debt you do not have to factor that into your expenses.

Start accelerating your retirement savings by contributing to a pretax retirement account either through your employer, like a 401k, preferably one that matches your contribution or a ROTH IRA. These also give you tax benefits.

Also, look at ways to earn more money. I am not much of an advocate for the websites that pay you to do surveys or even driving for Uber, however, there are ways to invest in yourself to earn more at your current job. My employer offers both tuition assistance and training programs to increase your potential.

Learn New Skills To Increase Your Income

By essentially doubling my income in five years I have been able to pay off my debt faster and put more towards retirement. I may never catch up as if I would have put more money aside when I was younger, but I can easily look at retirement now rather than working until I die.

Recently I opened a small brokerage account with Ally Invest. I am starting out small as the market is still pretty volatile with the COVID-19 pandemic but just putting a bit aside each paycheck to add to the account will increase my returns.

Start Investing

There are other ways to invest small amounts without having to know everything about the market. Acorns is an app that allows you to transfer small amounts to an investment account and build your wealth slowly. You will not get rich this way but it can help you transition into the market with a larger amount.

Another investing option is using Robinhood. Robinhood gives people without a lot of money the ability to invest in the market. It is also a great resource for learning out to invest. You can always go with a traditional investment firm like Fidelity or Charles Schwab.

My advice would be to do your research before you start investing in traditional investments and start off with something like Exchange-traded Funds (ETFs). ETFs are funds that invest in stocks, commodities, and bonds and are sometimes better than investing in one or two stocks.

Of course, do not invest if you are still living paycheck to paycheck as there are chances that you could lose most if not all of your money if the market crashes.

Whatever you decide, you cannot go back in time to start over, but you can start now. It is impossible to retire at 40 when I am already 48, but I might be able to retire properly when I am 65.