This is the second article in TwoCentss latest series,What to Know About Money at Every Age.
Youre even starting to think about saving for retirement and maybe even buying a house one day.
But how do you actually do all of that at the same time?
Here are some tips for setting yourself up for financial success.
First,dont be a money ostrich: Confront your debt.
For student loans, this can typically be done via theNational Student Loan Data System.
If you have credit card debt, check your bank website.
Then, rank your debt in terms of interest rate.
And thats fine, as long as you have a plan and you know what your priorities are.
Master These Personal Finance Cliches
There are a few personal finance standbys that youll want to master.
The first:Automation.
You should also be minimizing fees as much as possible.
- Order routing fees
How a fund manager places trades, has a cost impact.
While some routes are cheaper than others, that cost might be charged back to you.
- Foreign exchange commissions
Charges that apply when you exchange dollars for another currency like euros or pounds.
- Account inactivity fee
Can apply if your account falls below a certain minimum balance.
- Account maintenance fees
For services like tax reporting and recording contributions.
- Late fees
Can apply when payments are overdue.
- Front-end load
Commission or sales charge that applies at initial purchase of an investment, typically mutual funds.
- Exit costs
Charges that apply when closing an account.
Many great funds are much cheaper than that.
Next, know your worth.
What youre earning now will influence what you earn for the rest of your career.
Its definitely worth it.
And finally, your lifestyle choices really will make a big difference on your bottom line.
Try your best tolimit your impulse spendingand be more deliberate with where your money goes.
Heres more on committing toimprove by one percent.
If you have a 401(k) at work, aim to contribute at least the employer match.
Then steadily increase the amount every few months.
(Hey, Ijust wrote about that.)
Low (or no) cost index funds will get the job done.
Figure Out Your Priorities
Its time to get serious about your goals and financial stability.
That means beefing up your emergency fund and considering what your other priorities are.
Do you want to own a home someday?
Youd better start putting some money away for a down payment and/orinvesting in a 529 college savings account.
Life only gets busier and more complicated, so take a little time to set yourself up for success.
Again, if you have a partner, sit down together and decide what your priorities are.
Maybe youd prefer to foregothe lavish wedding.
Im not going to tell you tosave double your income by the time youre 35, for example.
Then start making a plan, recognizing that trade-offs are going to occur.
It deserves extra scrutiny.
An expensive housing market has made owning a less attractive investment than it once was.
Additionally, manyhomes arent appreciating enoughto beat or even keep up with inflation.
Im not sure I would use the word investment in regards to buying a home.
But if we look at it from a different perspective, its like forced savings.
The more money you have to pay toward your mortgage, the more youre building in home equity.
It can be a good investment from a behavioral standpoint.
Still, a house isnt just about wealth accumulation for a lot of people.
Youll have privacy, stability and a place to call your own.
Your home isnt a means to an end; its an end unto itself.
So, consider: Where will you want to live for the next decade or longer?
How much money do youneed for a down payment, and how can you save that much?
Will you be able to keep up with the upkeep costs in retirement?
Couldrenting in a more desirable locationactually be a better investment?
Additionally, figure out how a home plays into your career and living aspirations.
If you settle down and buy a house, that may limit the career opportunities available to you.
Youre less likely to be willing or able to relocate for a job, says Ortiz.
Dont try anything fancy, he adds.
If youre not trying to outsmart everyone, youre already ahead of most people.
Department of Agriculture, and thats not counting prenatal care or childbirth (not to mention college tuition).
First, plan for medical care expenses.
Even with employer insurance, having a baby costs a lot of money.
Know the ins-and-outs of your insurance terms: Whats your deductible and out-of-pocket max?
See if you could set up bill payments over time with your providers.
And though it shouldnt be the case, this matters more for women.
Childcare, too, is wildly expensive,surpassing $2,000 per monthon average in some states.
But if you dont show yourself compassion when you mess up, youll never get on the right track.
And that will carry us to our next installation ofWhat to Know About Money at Every Age.
