Whether you’re a college athlete navigating NIL deals, a pro athlete earning your first big paycheck, or someone just starting out, taking the time to prioritize your money situation can shape your future in all the best ways. Saving, investing, and leveraging compound interest are key steps to building a secure financial foundation. Looking back, I wish I prioritized investing in my retirement fund and the stock market during my first full-time job in the NBA. However, after gaining valuable advice at 24 years old, I started taking my financial future seriously. The earlier you start, the more you can benefit from the powerful ally that is time. And if you feel like you’re starting late, don’t worry—there’s still plenty of opportunity to make your money work for you.
The Power of Saving: Where to Start
Build Your Emergency Fund. One of the first steps to financial security is creating an emergency fund. Aim to save 3-6 months’ worth of living expenses to cover unexpected costs like medical bills, car repairs, or unplanned travel. This fund protects you from relying on credit cards or loans in times of need.
Set Clear Financial Goals. Think about what you want to achieve. Are you saving for a car? A down payment on a house? A comfortable retirement? Setting clear goals helps you stay focused and motivated. Even small, consistent contributions toward your goals add up over time.
Why Investing Matters: Growing Your Money
Let Your Money Work for You. Saving is essential, but investing is where the real growth happens. Unlike a savings account, which offers limited returns, investments like stocks, bonds, and mutual funds allow your money to grow exponentially.
Diversify Your Income Streams. Investing doesn’t just grow your wealth—it also provides opportunities for diversification. By putting your money in different types of assets, you reduce risk and create additional income streams, such as dividends or rental income, that can support you over time.
Understanding Compound Interest: Your Greatest Ally
What Is Compound Interest?. Compound interest is the interest you earn on both your initial investment and the interest it has already earned. This “snowball effect” is what makes starting early so powerful.
Why Starting Early Makes a Difference. The longer your money has to grow, the bigger the impact of compound interest. Here’s a simple example:
- Sarah (Age 20): Sarah invests $100 per month starting at age 20. She earns an average annual return of 7%. By the time she’s 60, she will have invested $48,000, but her account will grow to over $240,000 thanks to compound interest.
- Alex (Age 30): Alex invests $100 per month starting at age 30 with the same return. By age 60, Alex will have invested $36,000, but his account will only grow to $120,000.
This example shows that Sarah’s 10-year head start results in double the wealth, even though she only invested $12,000 more than Alex. Time really is on your side.
What If You’re Starting Late?
It’s never too late to start building your financial future. While starting early gives you a significant advantage, taking action now—no matter your age—is always better than waiting. If you’re starting in your 30s, 40s, or even later:
- Increase your contributions: if possible, contribute more to your savings and investments to make up for lost time.
- Take advantage of employer retirement plans: many companies offer 401(k) matches, which is essentially free money.
- Focus on high-return investments: work with a financial advisor to explore options that align with your goals and timeline.
Tools to Help You Stay on Track
Planners and Journals. A physical planner or journal can help you map out your financial goals and track your progress. Writing things down creates accountability and helps you visualize your journey.
Digital Tools. Apps like Mint, YNAB (You Need A Budget), and Personal Capital make budgeting and investment tracking easy. They sync with your accounts and provide insights into spending habits, savings goals, and net worth growth.
Automated Savings and Investments. Set up automatic transfers to your savings or investment accounts. This “set it and forget it” approach ensures you’re consistently building your wealth without needing to think about it every month.
Online Calculators. Use compound interest calculators to see how your money can grow over time. Seeing the numbers can motivate you to start and stick with your plan.
Time Is Your MVP. No matter where you are in life, time is one of the most valuable assets you have. Starting to save and invest in your 20s unlocks the power of compound interest, giving your money decades to grow. And even if you’re starting later, you can still take meaningful steps toward securing your financial future.
The key is to start now. By saving consistently, investing wisely, and using tools to stay organized, you can build a solid financial foundation that supports you throughout your life. After all, in the game of financial success, time truly is on your side.