I am seven years out of law school having worked exclusively in the public sector. I’m concluding a district court clerkship and about to begin working as an AUSA (criminal). The USAO has a three year commitment. If I choose to leave after that time, what are my job prospects in big law? Relatedly, what sort of work should I focus on at the USAO if I want to ensure that I am marketable to big law? I may get to the Office, love it, and never want to leave. But, I want to keep my options open.
Compounding interest makes any savings in your early 20s worth exponentially more than later on. Could be the difference of X00k depending on the difference in time
It all matters on how you see your career going. I saved/invested early because at a certain point I plan to scale way back to a low pressure/hour job that wont pay nearly as well as staying in consulting and my wife will stay home with kids (she is a teacher so the cost of daycare for two isn’t worth her working). But if you plan to be making $200k plus by mid 30s, saving 15-20% and working till 50 or beyond; saving an extra 5% or whatever of your 80k associate salary right now isn’t going to make a huge difference in your retirement plans.
Math - Let’s say you are 25 and throw an extra 5% of your $80k salary the next 4 years. At 8% growth in 25 years that extra savings now is $98k when you turn 50. If you have 6% wage growth from your $80k now, you will be making $345k at 50. Let’s say those last 4 years you decide to ratchet up your savings 5%, instead of now. That will be $86k at 50 (using 8% again). The difference between saving an extra 5% now vs then is only $12k, which using a 4% withdrawal assumption, is only a difference of $500 a year.
So all that to prove out that if you plan to continue an upward salary trend, saving now isn’t really that big of a deal. If you plan to stay flat, or even take a step back, then you cannot the beat compounding impact of saving now.
Very important. Compound interest is extremely powerful. $100k saved and invested at 25 could equate to $600k+ by 55 after accounting for inflation, and reinvestment of dividends (assuming markets grow at the same rate they have in the past)
To your point about the MBA, cost should be a top deciding factor (Sticker price of MBA + loss of salary/benefits + loss of growth of savings/investments = total cost). For some it is worth it, others not so much. That’s up to you to decide based on where you want to go in your career
Save now if you can even if you want to use the money for an MBA. Time is on your side and it’s important to set good habits early on in your career before lifestyle inflation kicks in post-college. I’m working towards financial independence now and one of the things I wish I’d done in my 20s is save more aggressively
I have the counter POV on this. If you’re making $70K/year at 23 or 24 and plan on making $300K+ by 35, I wouldn’t worry about saving (obviously maximize company 401k match, etc). No need to be frivolous to try to not save, but enjoy your 20s...it’s a fun time in life.
Yes, but how many people end up staying in consulting at least 5 years? A significant number of people move to industry before hand
Saving more is the one thing I regret not doing in my 20s. Congratulations on at least being aware of this! Our education system tries very hard to suppress this.
Curious about what you consider to be not saving enough. How much do you save/have saved?
Extremely important because of compounding.
Many studies confirm this. Invest as early as possible.
I appreciate all the advice. And I match my firm’s 401k contribution up to 6% of base (80) and about 6-10% a paycheck. I have a small emergency fund of $2k, an investment account of $6k, and my 401k is around the same roughly.
Grow your emergency fund a lot more before putting more into investments. You need a firm six month fallback to be safe.
You need to enjoy life and can’t just save . I think as long as you max 401k and own a Hiuse / condo instead of renting is huge beacause of the long term gain and how it adjust to inflation
Not about timing the market, but time IN the market