"Outstanding."

That was the word that President Obama used to describe one of Kendrick Lamar’s latest projects, To Pimp A Butterfly, a critically acclaimed thought-provoking masterpiece that outlines the institutionalized struggles of African Americans in the United States. On Obama’s favorite track, "How Much A Dollar Cost," Lamar tells a story about an addict who asks him for a single dollar bill. Initially, Kendrick rejects the request but feels conflicted between what is right and what it selfish, admitting that he isn’t responsible for judging. Like most millennials en route to their destinations, Kendrick brushes the man off. The homeless man demands his attention and forces the poet to really think about the impact (or lack thereof) of aiding the addict in his request. The addict stares deeply into Kendrick to really get him to understand the reason why a single dollar would not derail him from his desired destination.

Let’s think about it. How much does a dollar actually cost?

In fact, when it comes to your personal finances, a few dollars might mean the difference in a successful retirement and never being able to retire. Like Kendrick, many millennials find themselves en route to personal and professional goals, brushing off saving for retirement and investing until they feel comfortable with their achievements. We all might have a loved one who deserves to be retired and enjoying the fruits of their labor but is still working to make ends meet. Unfortunately, the cost of waiting is bigger than most think. In truth, for millennials, the earlier you save for retirement planning the better – drops fill the bucket.

Let’s take a look at the numbers.

Photo: Hartford Funds The chart outlines a concept in finance called the time value of money.  The time value of money is a concept that suggests that the present money available is worth more in the future than its current amount due to compound interest. This core principle proves that any amount of money is worth more the sooner that it is invested. In essence, time is on your side. If you were to start investing $200 per month at twenty-five years old, your account value would be north of seven hundred thousand dollars. As you can see in the graph, the longer you wait to invest, the ending account balance at retirement decreases dramatically while the number of dollars you would have to contribute increases. They weren’t lying when they said that time is money. As the number of African Americans invested in capital markets grows slowly, black millennials have an opportunity to change the economic culture in a large percentage of our communities. Below are three easy tips on how to get started:
  1. Employee Sponsored plans: A 401(k), TSP, or 403(b) are common accounts that should be the starting point for reaching your retirement goals. In these accounts, the employer will deduct pre-tax contributions from your paycheck that will earn interest and help you save in an efficient way for retirement.
  2. Contribute to an IRA: A traditional or Roth IRA can offer more selections with your investment choices and can have a multitude of tax benefits. You can contribute up to $5,500 dollars annually, and depending on the type of IRA, you might be provided with tax-deductible contributions or distributions that are free from federal income tax at retirement.
  3. Develop a financial plan: Having a financial plan can bring clarity to your financial circumstance and outline actionable steps to reaching your financial goals.
A dollar can cost you liberty and security in your financial future. As done in Kendrick’s song, we should deeply reflect about our dollars and what we are prioritizing. Investing early and often will only help you get to where you want to go on your journey.
Dasarte Yarnway is the CEO and Head of Advisory of Berknell Financial Group, a full service registered independent advisory firm that specializes in helping clients reach their objectives in the areas of Retirement, Investments, Insurance, Tax and Estate Planning For more information and insight, subscribe to Berknell’s monthly newsletter and the company’s blog at www.berknell.com

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