You landed your first full-time job, and more importantly for your wallet, your first steady paycheck. Congratulations! You may be thinking, “Now I can pay rent, my phone bill, credit card bill, school loans…” and the list goes on. You’re probably not thinking about savings accounts.
Something your parents may have taught you early on is to save money. It may not seem like a big deal right now, but it’s important to start saving to be able to retire on-time and live comfortably.
- Put a small amount into your 401K each year. Don’t wait until you have extra money. You can start small with 2% or 3% of your paycheck and build over time. Also, most companies will match what you put into your 401K up to 10%. That is free money that you simply cannot pass up. Someone who puts $5,000 per year into their 401K from ages 21 to 31 will have over $700,000 when it’s time for them to retire at 65-years-old.
- Set lofty goals for your long term financial success. Would you like to retire early? Do you want to travel when you’re retired? How will you plan for your goals?
- It might seem daunting now, but there is an end to your student loans. You want to be aggressive when paying off student loans. With savings account interest rates so low, it makes sense to pay off your higher interest rate student loan debts rapidly.
- Create an emergency fund. Life throws us all curveballs. Car accident, health concern or legal trouble? The penalties are steep when you have to dip into your retirement account for unexpected expenses.
Be smart and start saving when you’re young. Your older self will thank you later on.