Getting started with your money
Money
They don’t teach it in school. They tell us to never talk about it because its rude and private. So how the hell are we supposed to know where to start!?
Don’t stress, there are a few simple steps you can take today to set up your finances.
Money can get you to Ireland! Start saving for your next trip with the steps below.
Steps for Financial Success
#1: Emergency Fund
First thing you should do is make sure you have an emergency fund saved. This should be #1 and should be done before/during paying off debt (depending what kind of debt that is). You should put 6 months worth of living expenses in a high yield savings account. Some options are Marcus and Ally, they both have .50% APY and are FDIC insured. Do your research but make sure whichever you choose is FDIC insured and matches up with what you need (minimum amount, annual fees, etc).
#2: Paying off debt
Next you should figure out your debt situation. If you have credit card debt, work on paying that off first as that has the highest interest rates. If you have students loans, work on those next. For most students loans, especially federal ones, the interest rate is low enough that you can start investing while you pay off debt.
#3: Investing & Saving for Retirement
Third is to start investing & saving for your retirement. This is where getting started early is a game changer! My parents both started saving for retirement when they were in their mid-thirties. This was not because they did not have any money, but because they did not know how much more they would have if they had just started in their twenties. Or even the second they turned 18 (if only I had done this I would have thousands more by now).
A great way to get stated before you have a full-time job or career is to use a Roth IRA. This is a good fit if you if you expect your income to grow over the years and you want to put in already taxed money (because right now your taxes are lower than in the future). In this account you can put up to 6k a year and buy stocks, index funds, or ETF’s.
A huge myth is that you need to be rich to invest. Really its the opposite. To get rich you need to invest, even with the little money you have. You do not need to have a lot of money to open an investment account (you can start with just $50 or less). What I want to educate young people on is that they can start now! Maybe you make 10k a year with your on-campus and summer job (this was me during college). You can take a few hundred or maybe a thousand and invest that rather than let it sit in your bank account doing nothing and tempting you to spend it. I remember all throughout college I had a few hundred dollars I could have invested a year. I know this is not the same for everyone, and investing is a great privilege, but if you have it, run with it. You can use this tool to see how far your investments will get you.
#4 Short Term & Long Term Savings goals
Now maybe you have your emergency fund, you started retirement saving, and now you want to save for that trip, or the couch, or a move. The best way to save for these goals is in your HYSA that your emergency fund is in, you can open up different savings accounts within the HYSA and label them for your goals. For example: Spain Trip 2022 with a goal of saving $3,000 in that account. Maybe you have an even bigger goal of a down payment on a house- the same applies, you just need more patience because maybe you need $40,000 and it will take you multiple years to fill that account up. Having a HYSA for these goals are fantastic because they will accrue interest while sitting there so you reach your goals faster. It also creates a small barrier between you and these savings, so you don’t dip into them for necessary purchases.
That’s it.
Now get started!
Now you have the tools to figure out your finances and ensure a financially stable (and maybe even prosperous) future. Just learn from the steps above, do some research, and start putting that money away.
