(Bloomberg Opinion) -- One of the most frequent questions that comes through my inbox, my weekly “Ask Me Anything” series on Instagram and my DMs is some version of: “Did I start investing or saving for retirement too late?” It prompted me to run a couple of polls on Instagram. First, I asked, “Do you feel behind when it comes to wealth building?” Some 800 people responded, and 81% said they did feel behind.
Next, I asked, “What makes you feel behind?” More than 500 wrote in, and some themes emerged from their answers: They mentioned not investing or having only minimal investments, the burden of student loan debt, not owning a home. Another thing that came up over and over again was the feeling of being behind compared with friends and generic benchmarks of where they were “supposed to be” according to financial experts or, commonly, their parents.
For those who feel behind on their finances, there are certainly steps to be taken to start aggressively saving or investing or paying off debt. But sometimes the more advantageous move is simply to reframe your thinking.
Ditch the “benchmark” mentality. A few years ago, an article on how much you should have saved in your 30s went viral on personal finance Twitter. It referenced a common retirement benchmark of having twice your salary invested in your retirement account by age 35. Meaning, if you earned $50,000 annually, then you should have at least $100,000 in your 401(k) by 35. People were outraged. The main point of contention was that the advice didn’t acknowledge crushing student loan debt, wage stagnation and feeling trapped in a paycheck-to-paycheck cycle. It seemed to be speaking to a privileged few.
That’s the tricky thing about benchmarks. They help us determine whether or not we’re progressing. And we generally like knowing where we sit relative to others. But especially when it comes to personal finances, one-size-fits-all reference points can cause more frustration than inspiration. It can reinforce someone’s belief that they’ll be trapped in an endless debt cycle or that they’re doing everything wrong. Plus, these benchmarks are tied to a lot of assumptions about one’s preferred lifestyle post-retirement, which are primarily based on what older generations have needed or desired.
Is it a good goal to have twice your salary in your 401(k) by 35? Sure. But does it mean you’ve failed and can’t get back on track if you don’t? Of course not.
One of the most mentally healthy moves you can make when you feel behind with your finances is to ditch the benchmarks and figure out what works for your actual goals.
Create your own personalized goals. Instead of fixating on being behind some average number, focus on figuring out where you want to be. Think both critically and rationally about your current financial situation and what you’d like to achieve in a certain amount of time. You can err toward traditional milestones like saving for a down payment on a home, having a wedding or starting a family. But these goals should be specific to you. Perhaps you’d rather save for taking a sabbatical, traveling the world, starting a business or something else. Be hyper-specific with both a number and a timeline.
Want to save $10,000? Great goal. Now give it a timeline like three years. $10,000 divided by 36 months = $277.78. You need to put $277.78 into savings each month to reach your goal. Or $69 a week if that feels more manageable. If that feels too steep, adjust the goal by lowering the amount or extending the timeline.
As hokey as it sounds, creating a tracker of some sort can be really helpful for both savings and debt payoff goals. There’s the classic thermometer you fill in as you get closer to your goal or even a simple spreadsheet that tracks progress monthly. Either allows you to look back at how far you’ve come, which is important to remember in moments of frustration.
Don’t put off investing just to become debt free. Even though I’ve just extolled the virtues of creating your own financial goals, there is one caveat. You don’t want to halt all investing until you’re debt free with a fully-funded emergency savings. That could take well over a decade for many.
At the bare minimum, you should at least contribute enough to your 401(k) to get an employer match. No match or employer-sponsored plan? Then aim to put 5% towards an IRA. You don’t have to start right at 5% either. Instead, you can slowly push your way up by first setting aside one percent, then a few months later increasing to two percent and so on. These incremental shifts can be an invaluable tool for reaching financial goals.
Is five percent enough to be setting aside for retirement long-term? No. But it’s helpful for future you to be putting even something modest aside early and consistently than trying to play catch up.
And remember, the money in your retirement accounts should be invested and not sitting in cash. Despite the term “saving for retirement” you really should be investing for retirement.
Comparing ourselves to others is a hard habit to break. But hopefully we can give ourselves permission to celebrate our own wins and pursue financial benchmarks we deem relevant to our lives.
This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
Erin Lowry is the author of “Broke Millennial,” “Broke Millennial Takes On Investing” and the forthcoming “Broke Millennial Talks Money: Stories, Scripts and Advice to Navigate Awkward Financial Conversations.”
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