Personal Finance Insider writes about products, strategies, and tips to help you make smart decisions with your money. We may receive a small commission from our partners, like American Express, but our reporting and recommendations are always independent and objective.
- While there might be cultural expectations to care for one's parents in their old age, I've decided to focus on putting on my financial oxygen mask first.
- It was my father who encouraged me to prioritize my own future when he said nobody else can save for your own retirement but you.
- Ever since I started working, I've made it a priority to contribute to employer-sponsored retirement plans.
- Now that I'm self-employed, I contribute to a Health Savings Account (HSA), IRA, and Solo 401(k) to help me meet my goals.
- This article is part of "Money That Lasts," an ongoing series about generational wealth from Personal Finance Insider.
Like most people, I can't say that I was given much financial education in my early years. Money management basics and financial literacy weren't taught in school, and my family never talked directly about money. It was definitely a topic that was avoided. Everything I learned was by way of observation and by reading books and articles online.
I was raised by a single mom who made a lot of sacrifices, worked two full-time jobs, and pretty much did everything she could to make sure her two kids were well taken care of. And while I knew there were times when things were lean, she wasn't someone who wanted to deny her kids any opportunities or wants.
And as my parents are nearing retirement age, I worry whether I should step in and help them financially. That's because as a first-generation Vietnamese American, it became ingrained in me that we should put our needs last while taking care of everyone else. Anything we had, we should share with others. While there might not be direct pressure, it's part of our culture, and how I was raised.
To build first-generation wealth, I've learned to put my financial oxygen mask on first. It hasn't always felt like the right or easy thing to do, but it's what's right for me.
Balancing my needs with helping family
At times, it can feel like a struggle. While my family has never put pressure on me to help them financially or had expectations that I would care for them as they age, I wrestle with what can feel implied and demonstrated from my extended family. There can be expectations that the children care for the parents, and that kids are to financially support their parents.
While this arrangement works for some families — some families pool their funds to help each other pay for weddings, put down payments on their homes, and buy cars — I'm concerned that I won't have enough for retirement. As a single, childless woman in her 30s who works for herself, I can't say I have much of a financial fallback. For the most part, as an adult, everything that's in my bank account is money I made on my own.
I certainly help out my family when I can, but in no way do I find myself in a situation where I need to sacrifice my retirement savings goals to help others.
Here's what I'm doing to save for my retirement:
Saved in an employer-sponsored 401(k)
Before I started freelancing full-time, I would put money away into a 401(k) account. I usually contributed enough to get the employer's match. After all, that would be money left on the table, and is considered part of your compensation. At first, I socked away 6%, and by the time I left my job working at a labor union, I was putting 12% of my take-home pay toward my 401(k).
Contributing to a Health Savings Account
As a self-employed person, I purchase my own health insurance through the marketplace. And because I have what's known as a high-deductible health plan (HDHP), I am eligible to make contributions to a Health Savings Account (HSA).
While an HSA is primarily known to be used as a way to help one pay for medical bills and eligible medical-related expenses, you can also use it as a way to invest for your retirement. How? Some HSA providers have a partnership with a stock brokerage. In turn, you can invest in the stock market with your funds.
Instead of using my HSA contributions to cover my deductible and prescriptions, I'm using it to save for my retirement. I've aimed to tuck away the maximum, which is $3,550 for 2020.
Auto-saving in a traditional IRA
Besides making HSA contributions, I auto-save into a traditional IRA. Even during times of uncertainty, I make a point to set aside $500 each month toward my retirement contributions. It adds up to $6,000, which is the most you can squirrel away as an individual.
That way I can feel assured that I'm making some headway with investing in my future self. Because this is on auto-pilot, I include it as part of my monthly living expenses, such as rent and other bills.
It's not easy to put your financial needs first. You can always do more for others and sometimes you might feel the weight of pressure to do so. There are certainly times when I feel the tug of obligation or a pang of guilt.
Funny enough, while I grew up primarily with my mom's side of the family, it was my father who told me that you need to save for your own retirement. Nobody else can do it for you. And it's entirely true. You can take out a loan for your car, your house, and to go to school, but you can't borrow for your own retirement.
Source: Read Full Article