It is never too early to start planning for your future. The better prepared you are at a young age, the better set up you will be for a successful future. That being said, it can be hard to know just how to invest your money when you are just starting out. There are a lot of things to consider and a lot of information to overwhelm you. While we can’t tell you exactly how you should invest your money, we can offer you some starting points to look into.
- Retirement – Starting to save for retirement early is never a bad thing. When it comes time to retire you don’t want to be worrying about money any more, you just want to enjoy your time and relax. The sooner you start planning for, and saving up for, retirement, the easier things will be when you finally get there. IRAs and employer-sponsored retirement plans are the best places to start. See which one works best for you, or use them both if you can. When you are young the greatest asset you have is time, so make sure you are using it. If you start saving when you are in your 20s, that gives you roughly 40 years to adequately save up for your retirement.
- A House – Most people will tell you that buying a home is one of the best investments you can make. This is not always the case however. Depending on your situation and the economy at the time, it may make more sense for you to rent. If you are going to be living in a place for less than 5 years, for example, this would be a good time to rent. If, however, you plan on being there a long time, then a home could be a very good investment.
- University – Saving up money for your education is usually a good idea. Investing in yourself is, in most cases, a very worthwhile investment. There are even several types of plans out there that you can look into to maximize how effective your school savings plan is. However, make sure you plan on following through with school and that you are going for something you are passionate about. If you are simply going because you think you are supposed to, you are more likely to drop out or not find a job in your field, effectively making your savings plan not worth it.
- Short Term – Your options for short term investments are pretty much the same regardless of your age. You can look into things like CDs, savings accounts, and emergency funds for more information on these. The amount in these funds will depend on your current financial situation, but you should try to store the equivalent of three month’s living expenses.
No matter how you choose to save your money, the important thing is that you do it. One of the best decisions you can make as a young person is to start preparing for your future now. Consider all of your options before you decide on any one of them, and make sure you stick to your plan once you’ve started it.