Start Early- Quick Saving & Investment Tips For Professionals!
As young professional, you do not start saving and investing when you get the first salary. Your main excuse is that you may have to pay off the loans you took for college education or interest charges on your credit card dues. You also may feel now is the time for you to enjoy life. However, David Kerr III , an entrepreneur and strategist from the United States, says it is important for young people to save and invest at an early age. It will go a long way in helping you reach your long-term goals of buying a new house or car of your own. Moreover, you should start keeping aside a certain portion of your income at the beginning of your career and invest it in a lucrative retirement scheme. Only then you will have enough money for your twilight years when you are unable to work.
He goes on to explain that it is essential for you to curtail your unnecessary expenses and start keeping aside a certain portion of your earnings as savings and investment. He points out the following ways you can achieve this objective:
Prepare a financial budget
First, you need to prepare a budget before taking any decision on paying off a particular debt or making any kind of purchases. You have to consider your sources of incomes, the expenses you incur every month and your outstanding debts like college loans. From your total monthly income deduct your living expenses you incur every monthly like rent, mortgage, utility bills and medical cost. From the amount that remains, subtract your debt payments. This will give you an idea of how much money you have to save and invest.
Create an emergency fund
Next, you need to create an emergency fund with a sum of money, which is equivalent to 6 months of your total monthly expenses. You should keep this amount in a separate account to meet any unforeseen expenditure you may have to incur because of an illness. You should make it a point to contribute some of your income to this find every month to ensure it grows to a sizeable amount. This will teach you the importance of financial discipline and make you think twice before making an extravagant purchase.
Enroll in your organization 401(k) and start contributing
You should enroll in retirement saving plans like 401(k) that your employer sponsors for his/her employees. Under this scheme, you contribute about 3% to 6% of your salary to this fund every month before incurring any expenditure. Your employer also makes a matching monthly contribution to this fund on your behalf. The amount in this account keeps on accumulating as long as you work for the organization that employs you. You can only withdraw this sum of money and the interest that accumulates on it at the time of your retirement.
The above investment tips can go a long way in making your future financially secure. David Kerr III goes on to explain that the soon young professionals understand the importance of investing at an early age, the more money they will be able to accumulate for their future. This will ensure that have no monetary problems during their retirement.