Setting personal financial goals early in life is important to your short-term and long-term financial health. There are many different things you can do with you money, but you need to have a plan if you don't want to wind up buried in debt or living paycheck to paycheck for the rest of your life.
Organize Student Loans
If you have student loans, make sure you know the repayment schedule and come up with a plan for paying them off as quickly as possible. The National Student Loan Data System (NSLDS) is a great way to retrieve and track your loan information. Whenever you move, provide your lenders with change of address information. Remember, you are required to make payments whether you receive a bill for repayment or not.
Putting Aside for a Rainy Day
Financial experts recommend having an emergency savings account that will cover at least three months worth of living expense. If you're on a tight budget you may think you don't have much money to spare, but moving as little as 2 percent of your income into an emergency savings account each month will help you build a safety cushion and avoid debt when you're hit with surprise expenses like car repairs, home repairs and medical bills. Having a savings account helps you cover these unplanned events without amassing credit card debt.
Saving for Fun
It's important to separate your financial assets if you want to make sure you use money for its intended purposes. Aside from an emergency fund, you should also consider a savings account that sets aside money for vacations or other recreational activities. Again, planning ahead when you want to have a vacation helps you avoid overusing your credit card and paying more in interest in the long run.
Once you’ve saved an emergency fund, try to find some extra cash to invest in stocks, bonds, real estate or other growth investments. If you’re willing to accept some financial risk, stock investments can be very profitable over the long run. Just make sure you do your homework and understand how the stock market works and the fees and commissions you’ll need to pay on your investments.
Long-Term or Retirement Savings
Young people sometimes focus more on short-term financial goals because long-term retirement planning seems too distant to worry about. Start your retirement savings and investments early to give yourself a much better quality of life when you get older. You may have a 401(k) or other retirement accounts through work. You can often set up additional tax-free retirement accounts through a bank or financial services company. Investing directly in stocks and other long-term investments is another option.
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