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Personal finance is hard no matter what stage of life you're in. For zoomers just entering the workforce, the challenges are coupled with a lot of uncertainty.

That combination is what brought Carolina to us with her question on this week’s episode of Explain It to Me, Vox’s go-to hotline for all your questions.

Carolina is fresh out of college and already stressing about retirement. The older people in her life give her the same advice that generations before her have gotten: start saving immediately, contribute to your 401(k), and don’t touch it for decades until you’re ready to stop working.

It’s sound advice, but Carolina wonders if it applies to her and the rest of her cohort. She knows the havoc the Great Recession wreaked on everyday people and the economy at-large. “I think people assume the stock market is always safe,” she says. “But then it keeps crashing.” It's understandable why someone might be hesitant to put their trust in a financial system that had a scare as recently as this summer. 

Can you enjoy today while preparing for the future?

To answer this question, we enlisted Vivian Tu, AKA Your Rich BFF. Vivian is a former Wall Street daytrader and currently hosts Networth and Chill (Explain It to Me and Networth and Chill are both part of the Vox Media Podcast Network).

“You've got the folks who say ‘I'm going to blow all my cash today. I'm going to go on a shopping spree, because who knows if I get to retire in however many years.’” Tu says. “Then there are folks on the opposite side of the spectrum that say, ‘I need to prepare. I need to only think about retirement…I will have the worst life today so I can have a better future.’”

We sat down with Tu to discuss how to plan for the future while enjoying the now  and how younger generations can adjust to a changing financial landscape.  (Below is an excerpt of our conversation, edited for length and clarity.)

Jonquilyn Hill: How should we think about balancing living in the now and preparing for the future?

Vivian Tu: I ask folks to find the middle of that barbell. You are allowed to enjoy your life today. I promise you, you are not put on this big green earth to work a 9 to 5 to hate your life. That is not your ultimate purpose. You are allowed to have the little treat. You are allowed to take that trip. You are allowed to go and grab a manicure with a friend because it is fun. 

You do not want to have so much fun today at the expense of future you. You want to be able to have fun today and tomorrow. 

Practically, what tips do you have for young people who are thinking about retirement?

I always tell everyone, there is a special Your Rich BFF method: you need to STRIP. Everyone says, “Oh, did I pick the wrong career?” No, strip is an acronym.

S stands for savings. You want to set aside an emergency fund. In particular, I recommend putting your emergency fund into a high yield savings account so that your money waiting for that rainy day earns interest in the meantime. If you are a singleton, 3 to 6 months of living expenses is a good bet. If you are head of household, you have dependents, I would say closer to 6 to 12. 

T is total debt. A lot of us have debt – that is not a bad word. It is just a tool. What I say is rank it from highest to lowest interest rate. Make the minimum payment across everything to keep your credit score high. But then any additional funds you have for debt paydown goes towards the interest rate that is the highest.

Up next R: retirement. Take advantage of tax-advantaged accounts through your job. You can also open up an IRA or a Roth IRA. 

And then I. This is important; it's not enough to just open those accounts, you actually have to invest. Take the cash that you're putting into those accounts and make investments that make sense based on your risk profile. Target date retirement funds or index funds often make sense. 

And the last step is so critically important: P – plan. You don't get to have happily ever after  if you do not have a plan. Write down what your goals are, what those milestones are, what you’d like to accomplish, the amount of money it's going to take to get you there, and then back into what you need to do to get there.

How do you protect yourself and those investments from another financial crisis? 

It's really important that your portfolio makes sense for how far you are away from retirement. 

So when you're 20, yeah, you can be 100% or 90% in the stock market and have 0% or 10% in bonds. When you're 50, it should look almost flipped. 

But it really depends on how much you're making and how much you already have. Every single person is a little different. 

What about people who are just getting by? How should they prioritize retirement savings? 

If they are just getting by, first and foremost we want to try and maximize that income. People always balk when I say this: You need to be asking for a raise somewhere between 10 to 15% every single year. 

Ooof. 

I'm not saying you're getting it  But if you ask for 10 to 15 and you get eight, that's good, because eight is still going to help keep you above the inflation rate. 

Retirement and savings in general are often presented as this sacrifice. You're going without your fancy groceries now so that future you can go on cruises and golf and do whatever it is that people do when they're retired.

JQ's moving to Naples in her retirement! 

But how do you find that balance? How do you prioritize those things? 

I think it's about providing yourself with a life that you are happy with today while also thinking, “Hey, it's not like saving for retirement means this money goes into a black hole.” You still get to spend it just later.

You're not just setting this money aside and then getting that same number back in retirement. When you start investing your money, when it has a little bit of room and time to grow, that money gets to work really hard for you. And so you might put in $100,000. That $100,000 could be a couple million dollars in retirement. 

 Let Explain It to Me answer your biggest questions 

The Explain It to Me podcast is a hotline for all your unanswered questions, and host Jonquilyn Hill is your friendly guide who will find you the answers you’re looking for – and maybe even the ones you don’t expect. Call us at 1-800-618-8545 or fill out this form and tell us what’s on your mind.

Corbis via Getty Images

In search of policies that could help the cities of the future: Billionaire and former New York City Mayor Michael Bloomberg has launched a $50 million project to address the biggest issues of cities around the world. The ideas exchange will cover how to handle and improve facets of city public health and social services, including transportation, air quality, public corruption, infectious diseases, and more.

Feeling ticked off? In a 2019 poll, 84 percent of respondents felt that Americans were angrier than they were a generation ago. Another poll revealed that baby boomers were the most likely to fall into the “extremely angry” category, with 57 percent of respondents claiming to feel enraged. Anger has a functional purpose, but too much of it can be unproductive. Here’s how to know whether anger is a problem in your life.

Are Democrats really “losing” Latino voters? The answer isn’t so clear cut. While the Democratic Party has definitely changed since Trump’s rise and those changes may have alienated some Latino voters, another part of the shift lies with Latino Americans themselves, who like many immigrant communities before them have become as ideologically and politically diverse as native-born and white Americans are.

Restoring the wetlands of the Coeur d’Alene tribe: After much of their land in northwest Idaho was lost to Western agriculture and logging interests, the Coeur d’Alene tribe lost their ability to maintain a balance between environmental protection and economic development. Now, climate resilience coordinators in the area are fighting against extreme drought to restore the wildlife and plant life on the land.

Victoria’s brand-new secret: The Victoria’s Secret Fashion Show returned last night after a four-year hiatus, this time airing on Amazon Prime instead of primetime TV. The iconic runaway display was canceled in 2019 as the brand  struggled to maintain its relevance through the 2010s.

More listeria worries: A day after separate listeria concerns prompted a recall of 10 million pounds of meat and poultry, the US Department of Agriculture inspectors found dozens of violations at a Boar’s Head plant amid listeria-related deaths and hospitalizations that began this summer. The USDA inspector general has started an internal investigation into the agency's handling of that deadly listeria outbreak. [CBS News]

Trump’s “impromptu DJ session”: On Monday night at a Philadelphia town hall, former president Donald Trump seemed to derail his own Q&A session. After two medical incidents delayed the event, Trump swayed to a playlist of music over the speaker for 30 minutes, leaving onlookers confused. Meanwhile, Democratic candidate Kamala Harris posted on X, "Hope he's okay." [New York Times]

Jim Watson/AFP via Getty Images

“How can you decide what is going to be the solution when every night when I watch reports from the region, I can name only one person who is of Palestinian heritage, who I regularly see articulate a solution or an idea? How do we get to a solution when our journals, our newspapers, our literature that dominate the conversation is not just devoid of Palestinian perspectives, but it’s devoid of Palestinians themselves?”

—Author Ta-Nehisi Coates in conversation with Sean Illing on The Gray Area, where they discuss the controversy surrounding his new book, The Message.  You can read and listen to the rest of the interview here.

Carol Lee Rose

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Today’s edition was produced and edited by senior editor Lavanya Ramanathan, with contributions from staff editor Melinda Fakuade. We'll see you tomorrow!

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