Frugal Family: Youth and Investing
Youth and Investing
“If only I knew then what I know now.”
It’s a cliche for a reason. For many looking back on youth is bittersweet, especially when considering investments. However, if you’re still young, there’s hope! We’re here to help you understand the impact of financial investments now on the future you. Here are some great tips to take advantage of in your 20s.
Understand the basics
From 401k to Roth IRA, investment terminology can be confusing, especially for youth. But to effectively navigate the world of saving, you have to understand retirement basics. For instance, contributing to a Roth IRA from your early 20s will allow for a substantial financial portfolio by retirement age. Take some time to read articles (like this one) and truly understand the impact of saving early. It’s also a great idea to speak with an expert. In fact, those who follow guidelines in this article will be well on their way to a financially healthy future.
Set retirement goals
Take a moment to imagine your life after retirement. Do you want to move? Travel? Enjoy the little things? Depending on your life goals, take some time to calculate the age you want to retire and what is a reasonable timeframe for goal. From there you can create a saving budget that will allow you to achieve your retirement goals.
We know this seems obvious, but you would be surprised how many young people postpone saving for their future until later in life. Rather than waiting until you are more financially secure, start putting away funds now—even if the amounts are very small. It will pay off (literally) when you reach retirement.
Track your expenses
Whether you do it the old fashioned way or use new apps, tracking your expenses can shine a light on to not-so-great spending habits. For instance, you could be spending $300 per month on subscriptions (online streaming services, gym memberships, food delivery services, etc.). While some of these things are necessary wants, you could trim down and contribute more to your retirement fund instead. Smart choices now will lead to a more stable future later.
Create a budget
Once you’ve started tracking your spending, create a budget that allows you to enjoy today while saving for tomorrow. In fact, several young people are saving half of their income in an effort to ensure a happy future after retirement.
Utilize your resources
401k matches. Roth IRA. Free expert advice from your bank. Apps to track spending or investments. There’s a wealth of resources available today, and a great deal is totally free. Do some research and use the resources available to you to ensure you are making the best investments now. In fact, options like 401k and Roth IRA will grow your contributions over time, allowing you to create a nest egg for the future.
While these tips are great for investing while young, many 20- and 30- year-olds already face overwhelming debt. If your debt has you concerned, contact one of our certified credit counselors today at 1-800-500-6489 to learn how CreditGUARD may be able to help you save through credit counseling and debt management.
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