Investing can be an intimidating prospect, but with these 10 tips, you’ll be able to start saving and investing money like the savvy young adult you are. Whether you’re looking to make your own investments or contribute to a pension, each tip is designed to help you manage your money wisely now and in the years ahead. Best of luck!
1) Start With a Savings Goal
If you're looking for a way to make your money work harder, start by setting a savings goal. That way, you'll know what you're saving up for and the money will be more likely to grow. The earlier you start saving, the better: the power of compound interest is something that can't be denied.
Even if it's just $5 or $10 a week, it really adds up over time. Set an automatic transfer so that every payday, a set amount goes into your savings account before you even get around to spending it.
2) Move Your Money From Multiple Accounts Into One
If you're a student, you might be juggling a variety of bank accounts. It can be difficult to keep track of all your transactions, pay bills, and stay on top of your finances when you've got multiple accounts.
One way to simplify things is by transferring all of your money into one account. This will make it easier for you to monitor how much money is coming in and out, keep track of what's due, avoid overdrafts or bounced checks, and take advantage of financial tools like free bill pay and free checks with mobile deposits.
3) Put Away an Emergency Fund
Putting away an emergency fund is the first step towards investing your money. An emergency fund will help you avoid having to rely on high-interest loans or credit cards in the event of an unforeseen financial crisis. Buying a car or house?
A good rule of thumb is saving enough money so that you can cover those expenses without borrowing any money. The size of your emergency fund should be at least three months’ worth of living expenses (mortgage, food, utilities, gas) but ideally it should be six months’ worth.
Putting some money away each month means the amount you need will grow over time and leave you with more flexibility when an unexpected expense comes up.
4) Open An Account at Your Bank
The first step is to open an account at your bank. This can be a checking or savings account, depending on what your needs are. Once you have opened an account, you'll want to start by setting up automatic deposits into this account for every month. This way you'll never miss a payment and it will take the guesswork out of budgeting.
Start with these tips and soon enough, you'll be on your way to being financially independent!
5) Set Up Automatic Investments
Automatic investments are an easy way to get started with investing. The funds are withdrawn from your bank account at a set frequency (weekly, monthly, quarterly), and invested in the chosen investment vehicle without any effort on your part.
Automatic investments allow you to use the momentum of your regular income to make compounding interest grow over time. This is often called dollar cost averaging because you're buying different amounts of stocks when prices fluctuate over time. It also ensures that even if you have a low income, you will still be able to invest some money every month.
6) Pick A Stock Broker To Work With
If you're looking for the best broker for stocks, look no further. TD Ameritrade is one of the best brokers in the business. You'll get great service and find access to a wide variety of investments, including stocks and ETFs. Plus, TD Ameritrade offers commission-free trades on more than 100 stocks so you can invest without worrying about how much it will cost you.
7) Consider Stocks and Mutual Funds as Investments
There are many ways that a student can invest their money. They can invest in stocks, mutual funds, and bonds. Even if the investments are not doing well, it is important to keep investing or saving because there will be many opportunities as the student grows older and gains more experience.
The following is a list of 10 things that every student should know about how to invest their money wisely:
1) Know what type of investment you want - There are various types of investments such as stocks, mutual funds, and bonds. Find out which one is best for your situation before you start investing your money into anything.
2) Understand what you're investing in - It's important that you understand what the investment does, how risky it is, etc.
8) Be Savvy About Student Loans And Grants
Take advantage of student loan and grant options. Grants are often more available than loans, and they offer a way to cover your educational expenses without accruing significant debt. If you qualify for a grant, take it.
Look into 529 plans. These plans allow you to set aside money specifically designated for your child's education - including college tuition, room and board, books, fees, or even special needs items. The earnings on the account grow tax-free as long as they are used for qualified educational purposes (though withdrawals will be taxed at the owner's income tax rate).
Your contributions can be withdrawn without penalty if your child decides not to go on with their education.
Invest in yourself!
9) Ask For Permission Before Accepting Gifts Or Loans from Family Members
When family members offer you a gift or loan, it can be tempting to accept. But before you do, take the time to consider how accepting might affect your relationship with them. If the gift or loan is more than you need, return it and tell the person why you're returning it.
If they are expecting payment from you in return for the gift or loan, offer something else of equal value instead. If accepting their gift or loan would lead to an awkward situation at home, find another way to get what you want without hurting your relationship with that person.
10) Stay Focused On Your Long-Term Goals!
It's not uncommon for young people to find themselves with a lot of money in the bank. Since you have time on your side, it can be tempting to spend all your cash on expensive purchases today. Remember, though, that you are building your future!
You might not need the newest car or latest technology right now. Putting some of your money into investments could help you save even more in the long run. Plus, if you are worried about getting bored with your day-to-day life while you are still in school, investing may keep things exciting and interesting!