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When you’re young and just starting out, it’s important to consider and plan for all of life’s major milestones that are on your horizon. Here are a few goals to consider now that will help you get your financial life in order and ready for all the important events and milestones, you’ll encounter on this journey called life:
Take Care of Your Future Self’s Well-Being by Establishing a Habit of Saving
Saving is a habit – not a destination. Creating a habit of saving early in life can make a big difference in the long run.
Make it easy by setting up an automatic deposit from your paycheck or an auto transfer from your checking to a designated savings account(s). Making it automatic really is the easiest and most effective way to save successfully.
You can set up auto transfers by:
Have an Emergency Fund
Having an emergency savings fund of at least $500 may be the most important difference between those who manage to stay afloat and those who sink into debt. As we mentioned earlier in our America Saves Series, three to six months of expenses saved for emergencies is the standard guideline. If three to six months of savings feels overwhelming, start with the initial $500 and go from there. Having an emergency fund will give you peace of mind knowing that you can afford to pay unexpected expenses when they pop up.
Pay Down Student Loans
Student loan debt is a burden for many and one that can follow you for many years. It’s important to address your loans as soon as you can and set up a payment plan that works for you.
It’s best to plan to pay your loans right away, especially if planning a family is one of your goals. Upon graduation, student loans are automatically placed in the “standard” plan, which is based upon repayment taking 10 years. These payments are often high but are typically the shortest option for most.
Seek out loan forgiveness programs available if working in public service. There are also Income-Driven Repayment plans available that make it more affordable for many and can free up some funds to allow for creating an emergency savings fund.
Get more information by logging in to your account at studentaid.gov to review any loans you may have and make a determination on a repayment plan that is right for you.
Save for a Down Payment
Although there are currently some home loan options available that don’t require a large down payment, most need at least 5% of the purchase price to be paid by the buyer.
Having enough saved for a down payment can prove to be a big hurdle for many first-time homebuyers. Starting early and dividing the process into several steps along the way, can help make a major difference when it comes time to make the leap and jump into homeownership. Start by designating an amount. Since this is more of a mid-to-long-term goal, and you have some time to allow it to grow and earn, consider a high-yield savings account, money market, or certificate of deposit to maximize the interest-earning.
Then, AUTOMATE! Automated transfers are our favorite and most effective way to save successfully.
Save for Retirement
Starting to save for retirement early in adulthood can give you an advantage when it comes to compounding in the long run and is key to having enough stashed away for when the time comes. Ideally, you should start as soon as you get your first job, if possible. The more you save when you are young, the more you’ll have in retirement, which makes for better future financial stability.
Contribute to your employer’s retirement plan if offered. It’s recommended to contribute at least the same amount as your employer’s match and increase as your salary grows. For those without an employer-sponsored plan, consider an IRA at a financial institution and make regular contributions.
You can also seek advice from a financial advisor who can help you decide the right retirement savings goals and plans for you based on where you are now, and what you want to achieve in the future.
As you save for your immediate and long-term goals, your Credit Union has several blog posts that highlight the benefits of creating a budget and saving automatically:
©America Saves Week
It’s important to consider and plan for all of life’s major milestones that are on your horizon. Here are a few goals to consider now that will help you get your financial life in order and ready for all the important events and milestones.
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