401(k) Part III - How Much to Contribute?

When I was given information about my company's 401(k) plan, I was given an option to put a certain percentage of my income into the plan. Investing in a Roth 401(k) wasn't an option then so I only had the option to invest in a traditional 401(k) plan.

What could I afford to put into the plan? Ideally, I wanted to put 10% of my gross earnings into the plan, but could I afford to put that much into the plan? This was when I was going to put what I had learned from the book, The Wealthy Barber, into practice. 10% seemed like a lot. I was just starting out in my career, and I had expenses to pay: rent, utilities, car payments, food, entertainment. How would I be able to pay for all of these things if I automatically took out 10% of my income?

At the end, I decided to bite the bullet and elect to deposit 10% of my earnings into my 401(k) account. There are several reasons why I decided on 10%:

• If I didn't do it then, then I doubted whether I would ever be able to put that much into my account,
  
• I was committed to the idea of saving for my retirement and this was just the first step,
  
• I wanted to start off with 10% and then eventually increase the percentage, to eventually be able to max out my contributions,
  
• My employer did not match my contributions, so I had to put in enough to eventually reach my long term goal of having at least enough to retire, and
• I wanted to learn to live below my means and having money deducted before I can even get my hands on it, will force me to live within or even below my means.
  

So, once I set up my account, set my contribution percentage and picked out my investments, I was set.