Being young and financially irresponsible is great fun, but being old and broke stinks.

Still, that doesn’t mean you have to become a shut-in and put every spare cent into your retirement plan. Tuck away a little bit on a regular basis and you can party when you’re 19 and 99.

The turbulent 20s, that sometimes pleasurable, often painful transition from carefree adolescence to responsible adulthood, is admittedly a difficult time for anyone to focus on saving for retirement.

“It’s tough to start talking too many numbers with young people because a lot of times they’re also overwhelmed — it’s their first job, their first real paycheck, their first apartment, their first time dealing with health insurance,” says Derek Avdul, financial consultant and author of “Real Life 101: The Workbook.”

“When you have all these variables going on and they’re trying to be grown-ups, retirement just takes a back burner for a lot of them.”

The reason their parents’ generation continues to harp on it, with the best of intentions of course, is that many of them wish they’d started saving earlier, when they could have made smaller sacrifices and let compound interest do the heavy lifting. Compound interest, you may recall, is interest that is calculated on the initial principal and the accumulated interest of prior periods.

But that sage advice, as sound as it is timeless, still mostly falls on deaf ears.

“You can’t talk to them about 30 years from now and how compound interest is going to benefit them, because, as we all know, at that age you know a lot more than anybody older than you and you’re not going to need retirement money because you’re going to make it big on your own,” Avdul says.

Cut the financial umbilical cord
Unrealistic money expectations are rampant among young people today, according to author Nicholas Aretakis, who interviewed hundreds of 20-somethings coast to coast for his tough-talking survival guide, “No More Ramen.”

“Why don’t they save? The short version is, they never had to do it before. Their parents, the baby boomers and just after, have done so well economically that they’ve never had to have a budget before,” he says.

“The problem is, when they’re living at home, they take for granted that room and board is free, transportation is relatively free, most of their expenses are gratis on the parents, so they’ve got that financial umbilical cord. When they do break out on their own, they find out that everything has an associated cost. It’s a really tough concept for them that they just got done with college and they already have to save for retirement, so some of them are frozen in time and they just don’t start saving,” Aretakis says.

Make affordable sacrifices
Peg Downey, a fee-only Certified Financial Planner and partner in Money Plans, of Silver Spring, Md., says it only takes a small lifestyle adjustment early on, not a major commitment, to get this saving party started.

“If they just saved what they spend everyday at Starbucks, they would have a million dollars right there when they retired,” she says. “It’s phenomenal.”

Maybe not a million — but a half million, easy. Why quit the daily stop at Starbucks? You can brew that good stuff at home much more cheaply.

Let’s say that, beginning at age 25, you put the equivalent of seven $4 grande lattes a week toward retirement, setting aside $121 a month. If you invest it in a stock mutual fund with annualized returns of 9 percent, you would see $23,415 after 10 years, $80,814 after 20 years, $221,520 after 30 years and a whopping half-mil, or $566,440, when you retire at age 65.

Similarly, you can add even more to your retirement funds if you routinely set aside the price of small purchases.

Women: Pay close attention
Of course, historically, investing in a stock fund that mimics an index such as the Standard & Poor’s 500 has offered returns of 10 percent, but there is no guarantee that it will continue to do so in the future. Nevertheless, young folks are in the best position to weather the storms of volatile markets because they have more time to recoup losses.

Downey says young women in particular need to start socking away the latte cash sooner rather than later.

“They’re going to live longer, they’re going to earn less, and they may need to fund their own retirement,” she says. “The way that jobs work now, you don’t stay at one job more than a couple of years, so nobody is going to be building up any kind of pension, even if there was one.”

Make it, but don’t take it
The easiest way to make affordable sacrifices on a regular basis? Take the money out of your paycheck before it hits your hand.

“Get them to open up a savings account and, even if it’s $20 a paycheck, just siphon that off so that it automatically goes in there,” says Avdul.

“The first goal is to get them to take it out so they don’t have to think about it.”

Downey agrees: “It’s rare that people actually think to have money taken out of their check automatically every month; it can go into a money market account or a mutual fund.

“When I say that, people are just amazed. You never see it so you won’t spend it.”

Don’t pass up free-money 401(k) plans
Employer-match 401(k) plans work well that way for many. Although some young workers bristle at tying up their money for so long, an employer match is one of life’s rare free-money opportunities that are too good to pass up.

“So many people tell me, ‘I can’t afford the 401(k), I’ll do that in a couple years when I’m settled,’” says Aretakis. “You can’t afford to wait.”

Say your company will match 50 percent of your contributions, up to 6 percent of your salary. And let’s imagine you earn $40,000. If you agree to contribute 6 percent, or $2,400, your company would add another $1,200 to the pot. That’s a 50 percent return on your money without even putting it into a risky stock fund.

On top of that, you’re putting away money on a pretax basis, which lowers your income base when it comes to paying the tax piper.

“If you’re getting taxed maybe 25 percent state and federal, you just made 25 percent on your money, plus whatever cumulative interest you’re going to make on top of that every year by putting it into a diversified account. You can’t get any better return than that,” says Aretakis.

Of course, you will have to pay taxes on that money eventually, but in the meantime it can grow unfettered by taxes.

Live within your means
To find the scratch to sock away, Aretakis offers some suggestions.

Above all, strive to live within your means — not some Hollywood fantasy.

“Put together a budget and live beneath that budget,” Aretakis advises. Open up a brokerage account and start socking money away, he adds.

“Every young person is going to want to present themselves well, drive a fancy car, but it’s just not pragmatic in the early days. You have to be a lot more sensible, with the escalation of tuition and housing costs. If you don’t pattern yourself well early on, you’re just going to set yourself back.

“You can’t be keeping up with the Joneses.”

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Many people would like to be self-employed but fear the risk — with good reason. Within five years, half of new businesses are out of business.

Ironically, you’re particularly likely to fail if you follow such standard business school exhortations as “Innovate!” While such advice makes for interesting class discussions and may be appropriate for “intrapreneurs” inside deep-pocketed corporations, it puts the average entrepreneur at grave risk of going bust.

The key to maximizing your chances of success is to do the opposite of what is taught in business school:

1. Don’t innovate; replicate. Being a guinea pig is so risky: Your idea or its execution could easily be flawed, or it can be so new that the public isn’t ready for it. Tivo, an unquestionable improvement over the VCR, lost hundreds of millions of dollars in its first five years as it tried to educate the public. You probably don’t have hundreds of millions of dollars and five years to wait for profitability.

Instead, clone a simple, small-investment business that, in multiple locations, is successful. How can you tell? Check out retail shopping areas. Which stores are busiest? When I did that recently in the San Francisco Bay Area, I found that burrito joints are booming. The Bay Area is very anti-establishment yet needs fast food — burrito joints are perfect.

2. Don’t seek status; avoid it. Many business school case studies focus on high-status businesses, for example, biotech or high-tech. But the higher a business’s status, the tougher its competition. Instead, consider what Thomas Stanley in The Millionaire Next Door calls “dull-normal businesses.” Few graduates of prestigious MBA programs start sand-blasting, plumbing, mobile home park-maintenance, or truck brokerage businesses, let alone develop a chain of burrito carts.

A dull-normal business not only has less competition, it’s simpler to run, so less can go wrong. One of super investor Warren Buffett’s axioms is to invest only in ventures he can understand. So, he’s in such relatively simple businesses as a paint manufacturer, a food distributor, and a furniture store.

You’ll probably find that success — even in a grungy business — is much more satisfying than a high-flying failure. In addition to the money, it feels good to have lots of grateful customers — even if what you’ve sold them is only a burrito.

Would you feel uncomfortable telling friends that your career is pushcart peddler? No need to. Try, “I’m the president of Bigshot Burritos with branches throughout the D.C. metropolitan area.” Has a nice ring to it.

3. Invest little. Business schools intone: “It takes money to make money.” For the average entrepreneur, that’s wrong. If you’ve invested a bundle in starting your business, the nearly inevitable costly setbacks can be deadly. So, choose a business that requires only a small investment and then run it as cost-effectively as possible:

• Minimize rent. For example, instead of renting a storefront, sell your burritos (or soup, soap, espresso, whatever) from a well-signed, high-foot-traffic cart or truck. Or choose a business you can run from home: inside sales, utility-bill auditing or consulting.With my own home-based endeavor - career coaching — I have no rent and I provide a service rather than a product. That keeps my expenses to a minimum — nearly every dollar is profit. Plus, I advise half my clients by phone so I’m often able to counsel in my T-shirt and shorts while enjoying my backyard’s flowers and trees.
• Don’t take on a partner. Not only do they take half the profit, they deprive you of what you were seeking in self-employment: control. Besides, the self-employment battlefield is littered with partners who couldn’t stop fighting with each other. Want companionship? Hire a $10-$20 an hour assistant 10 hours a week. Need expertise? Hire a consultant by the hour or day. How to find one? For our burrito business, hire the owner of a successful one. Of course, promise not to open up shop near his or her store.

The next step

You probably don’t want to spend your life selling burritos or sandblasting a building. So, when you get your business running smoothly, hire someone to run it. Offer profit-sharing incentive. If the resulting business isn’t making enough money to meet your financial needs, clone it in another location. Keep cloning until you’re comfortable.

Of course, it’s not easy to succeed in self-employment. You must be a self-starter, able to sell yourself, and solve business problems readily. But this article’s advice will increase your chances of success, perhaps more so than an MBA. It certainly won’t cost you $100,000 plus the two years during which you could have been earning money.

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With home prices cooling off and apartment rents heating up, is now the time to buy your own place? Here are the ways to know when it makes sense financially to purchase your first home.

The squeeze is on for renters. Apartment rents are expected to rise 5.3% this year, according to the National Association of Realtors. That’s about double last year’s increase, and it’s the highest jump since 2000. Until now, rents have seen slow growth over the past few years as the booming real estate market has lured away renters into homeownership.

But that’s starting to change. Interest rates are rising and home price appreciation is slowing, so fewer buyers are looking for new homes. That gives landlords the upper hand to raise rents. Meanwhile, the real estate market is starting to turn from the seller’s favor toward the buyer’s. So if you’re a renter who has been dreaming of homeownership, is now a good time to take the leap?

Sure, a cooling real estate market is good news for buyers because it’s easier for them to negotiate a deal. But it shouldn’t be the main reason that pushes you into your first home. In fact, buying your first home is a personal decision that you should make independent of what the market may or may not be doing.

“Time means nothing,” says Michael Eisenberg, a CPA and financial planning specialist in West Los Angeles. You can’t predict what will happen to home prices in your neighborhood in the next few months, let alone the next few years. But if you’re looking to make the long-term commitment of homeownership, it helps to approach the decision like you would any business decision. You don’t want to buy on emotion, or because everyone else is doing it. “This is the biggest financial move a young person may ever make,” Eisenberg says. “You should make the investment because it makes sense for your finances. You buy when you’re ready.”

So how, exactly, do you know when your finances are ready? We provide a checklist of eight things first-time home buyers should have squared away before they consider a purchase — no matter where analysts say home prices are heading.

You are ready to buy when …

No. 1: You have a budget — and you know how to use it
Owning your own place comes with a slew of new expenses, so good money management skills are a must-have. If you don’t have a household budget right now, start one. (See “Build your budget” and “A simpler way to save: The 60% solution” to learn how.) You need to know where you are financially — where your money is coming from and where it goes every month — to know exactly how much you can afford to spend on a new home.

Once you have your current finances sorted out, draw up a mock budget for homeownership. Find out how much homes cost in your area and how much your mortgage payment will run. Then, factor in higher utility bills, homeowner’s insurance, property taxes, homeowners association fees, and maintenance and upkeep costs, as well as higher commuting costs if you’re considering a neighborhood further from work. If you simply cannot afford the increased expenses that come with a house, it’s never a good time to buy — no matter what’s happening in the real estate market.

No. 2: You have a sizeable down payment
Traditionally, to get your foot in the door, you’ll need a down payment worth 20% of the home price. That means for a $250,000 home, you’ll need $50,000 upfront. Sure, there are ways to get around that steep requirement with zero- or low-down loans, but those options will cost you. You may have to pay extra for private mortgage insurance or take out a piggyback loan with a much higher interest rate. With the slowing housing market, having that 20% down payment becomes even more important because you’ll start off with some equity in case you have to move earlier than expected. “In the early years, you aren’t building any equity with the mortgage payment,” says Eisenberg. “If the market changes or your personal circumstances change and you’re forced to sell, you could lose money” if you made little or no down payment. The equity in your home can also give you an extra source of cash in an emergency. (See “Why you need a home down payment” to learn more.)

And the money down is only the beginning. Don’t forget to factor in closing costs (3% to 6% of the purchase price) property taxes, initial repairs, moving expenses and decorating costs.

No. 3: You have a reliable source of income
Buying a home is a long-term financial commitment, so you’ll need consistent cash flow to cover those monthly payments — not to mention the little extra expenses that come with homeownership. If you’re in school, plan to go back to school, have a less-than-reliable job or plan to start a family, you need to take a good look at your future cash-flow abilities. Will you be able to make your mortgage payment six months from now? How about six years from now? “Some couples can afford the house when they’re both working, but if a kid comes along and one wants to stop working, then they have a problem,” says Eisenberg.

No. 4: You have an emergency savings fund
If you have enough cash on hand to cover three to six months of your living expenses, you’re one step closer to being prepared for homeownership. Just in case something happens to disrupt your steady income — say a serious illness, unexpected layoff or even a natural disaster that prevents you from working — you want to make sure you can still afford to make your mortgage payments until you can get out of your rough patch, says Bob Baldwin, a CPA in Charleston, S.C. Learn more about how and where to build your emergency stash.

No. 5: You have your debts under control
Call ‘em crazy, but lenders like to make sure you’ll have enough money each month to pay your obligations. So before they’ll give you a mortgage, they take a look at your so-called debt-to-income ratio. Generally speaking, they want to make sure your monthly housing costs — including principal, interest, taxes and insurance — will consume no more than 33% of your monthly gross income; and that your total debt payments, including your mortgage, credit cards, student loans and auto loans, will remain below 38% of your total pay. So if you have large outstanding debts, it’s a good idea to try to pay them down before applying for a mortgage to make sure you can qualify for as much money as you’ll need. This also means you should avoid taking on any substantial new debt six months to one year prior to your purchase, or you may throw your ratio off. So, it may be best to drive that clunker for a little while longer, or put off charging that European vacation. Find out here how much you can qualify to borrow.

No. 6: Your credit report is in good shape
Nowadays you don’t have to have perfect credit to become a homeowner, but a decent history can help you get a lower interest rate on your mortgage and a lower monthly payment. The government allows you to check your credit history free once a year from each of the three main credit bureaus at AnnualCreditReport.com. So take a peek to find out what lenders see about you. If you see any errors, correct them now. If you see room for improvement, find out how you can boost your score.

“Don’t be sloppy the year or two before you buy the house,” says Baldwin. You don’t want any missed payments or other black marks that could lower your estimation in the eyes of lenders.

Having bad credit, however, may not be your biggest concern. If you’re just starting out, you need to make sure you have a credit history. If you hold a credit card or took out student loans, you’re probably covered. If not, find out how you can build a stellar credit history from scratch, preferably one year or more before you plan to buy.

No. 7: You can make a long-term commitment
Are you ready to stay put for at least three to five years? Typically, that’s how long you’ll have to keep the house in order to recoup your buying and selling costs. If you sell before then, you may lose money on the deal. And if you do turn a profit, you’ll have to pay capital gains taxes if you lived in the house less than two years. The length of your stay becomes even more important now that home appreciation is beginning to slow from its previous pace. If you don’t think you’d stay put for that long, you may be better off renting.

Don’t fret: Renting can actually make better financial sense for some people at different times in their lives, says Eisenberg. If you think you may get a job transfer, go back to school or otherwise need to move within the next five years, renting gives you the flexibility you need and could possibly save you money.

Want to find out if renting or buying makes the most sense for you? Our calculator will crunch the numbers to help you decide. In the slot for “appreciation rate,” assume your home will appreciate at the rate of inflation or a little more, just to be safe. Right now, that’s around 3% to 4% annually.

No. 8: You are prepared to become your own landlord
Even if you can afford homeownership, don’t buy simply because you can. You need to make sure you’re ready to live the lifestyle. Owning a place comes with a fair share of new responsibilities, headaches and costs — not the least of which is becoming your own landlord. When you rent an apartment, you simply call the landlord if something breaks. With your own home, if it’s broke, you fix it — or you’ll have to pay someone else to fix it. You’re also responsible for upkeep, including yard work and shoveling snow (unless, of course, you buy a condo without a yard). Will you have the time, energy or desire to maintain the property? How about the money for all those little extras, such as buying your own lawn mower and hiring the occasional plumber? Make sure you know what you’re getting into.

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