Qapital and Tip Yourself allow users to set up regular or occasional withdrawals from linked checking accounts into savings. Qapital enables users to set up their own parameters for when money is moved into savings, such as the “guilty pleasure” rule. Whenever you indulge in one, a set amount of money goes into savings. “Tip yourself” provides a twofer benefit—you “tip” yourself for virtuous things like going to the gym, both saving money and reinforcing good habits. 

Building up a pot of emergency savings can avoid a lot of pain, too. Having a few months’ worth of expenses saved may mean not needing to rack up costly credit card debt when the unexpected strikes. That cash could sit in an online savings account earning interest—there are several online money market and savings account with annual percentage yields (APY) that top 2%.

“They basically burned all the money they paid on their loan.”

If your company matches 401(k) contributions, any sentient planner will urge you to put in enough to get the full match. If an employer doesn’t offer a 401(k) plan, savers may be able to contribute up to $6,000 pre-tax to a traditional individual retirement account, where earnings on money compounds, tax-free, until it’s withdrawn decades later. 

Younger employees with some extra cash flow may prefer a variation on the traditional 401(k) account, one funded with after-tax dollars—Roth individual retirement accounts or a Roth option within a 401(k) plan. 

Once your after-tax money goes into a Roth, earnings on it grow tax-free, and there are no taxes to pay on your contributions when you withdraw money in retirement. Roths make a lot of sense when someone is starting out and is in a low tax bracket. As long as your modified adjusted gross income is below $137,000 as a single person, or below $203,000 as a married couple filing jointly in 2019, you can open a Roth IRA, although the amount you can put in starts to fall at incomes of about $120,000. There is no such income limitation for taking part in a Roth 401(k).

Any thought of retirement savings, however, pales next to what weighs heavily on many young professionals: School loans.

Focusing on debt can make sense “even if the interest rate on it is low and it’s financially prudent to invest more rather than pay off loans,” Bera explained. “Debt is stressful. No client has regretted paying off their student loan.”

Those with federal student loans may qualify for an income-based repayment plan. Such plans take one’s discretionary income, family size and state into account and cap loan payments at 10% to 20% of discretionary income for as long as 20 to 25 years.

But there’s a price to be paid down the line. Frailich worked with a couple, both with advanced degrees, who had about $160,000 of student debt. When the couple was starting out, they qualified for an income-based repayment plan, and went on one. Ten years down the line, the amount they owe has swelled to about $210,000.

“They basically burned all the money they paid on their loan,” said Frailich. “But when they made that decision, it was the right choice.”

Housing isn’t a good investment for many young people.