 10
financial tips for young people
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I could go back in time, I would do certain things differently. I'm not saying
I have a lot of regrets. But when I was younger, I tended to have myopic vision.
For instance, it was hard to imagine that one day I would be older. Even today,
sometimes I look in the mirror and wonder, who the hell is that?
I wish that, when I was younger, someone had sat me
down and told me a few things. Or else I wish that I'd listened
when someone attempted to do this.
If you're young, take a seat and listen
up. These gems will help you on your quest for financial success.
1. Go to college. You
may want to do something that doesn't require a college degree.
For instance, you may dream of playing professional golf or running
a barn and training horses. But give serious consideration to enrolling
in college anyway. Yes, it's a major
investment, but if your parents are unable to help you pay for
it, make it happen yourself, even if it means taking out loans.
One way to save on costs: Go to a community college first; then
transfer to a four-year university after two years.
It's easier
to get a degree when you're young than when you have a home, family and all the
adult responsibilities that go with these things. Your earnings potential increases
significantly with a college degree -- which will come in handy if your other
dreams don't materialize. Plus, you will likely experience a love of learning
that you will never outgrow. 2. Find
your purpose. If you're having trouble figuring out what you want to do
with your life, look within. You were born with certain talents and natural abilities.
You know which subjects you excel in and which ones you struggle with. Choose
a career that enables you to maximize your gifts in a way that fulfills you or
helps others. As you grow, your career may change along with your desires. But
for now, gravitate toward a field that feels like home.
3. Begin retirement planning
with your first job. This tip is so important. If the company
you work for offers a 401(k) plan, sign up at your first opportunity.
If there's no such plan, divert some of your paycheck into an IRA.
Believe it or not, if you're lucky, one day you'll find you are
older, so it's best to be
prepared. Setting up automatic contributions to either one of
these retirement vehicles at a young age will help you build wealth
painlessly.
Just
as an example, let's say you invest $200 a month beginning at age 25, and you
earn 7 percent annually on that money. By the time you turn 65, you will have
about $525,000 saved up. If you wait until you're 35 to begin saving, assuming
the same monthly investment and rate of return, you'll have amassed less than
half that amount -- about $244,000. This illustration simply shows the impact
that a 10-year head start can make on your savings, thanks to the magic of compounding.
Do the math yourself with Bankrate's retirement
calculator.
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