Saving for retirement, paying off student loans, buying a home… these are only some of the expenses you will start to ponder in your twenties and thirties. Which ones should you save for first, and which ones can wait until later? Read on to find out more:
One of the best things you can do for your future self in your twenties is to start saving for retirement. Yes, it seems like a long time away. But, the best thing you have going in terms of a retirement account is longevity. Every time you put money into your retirement account, it has the chance to earn massive interest. The interest is much more than what you can expect to gain in a savings account or other, lower-risk account. As much as you can, max out your retirement savings for the year. The money you put in may double, triple or more as long as you're contributing to it regularly.
Paying Off Student Debts
This is a tricky one. Of course, you want to pay off your debts and avoid the interest that comes with keeping a loan active. But, you also have to consider how much the interest on these loans is. For some student loans, interest rates are pretty low. You might have other, higher interest rate loans to pay off first. And also, your retirement accounts might earn you more interest on that money than what the lenders are charging as interest. Since this is a tricky question that affects your long term financial health, consulting a professional financial planner would be a wise move.
Buying a Home
Emotionally, buying a home may be the expense that you're most ready to drop a lot of cash on. There are a couple of things that go into a smart home buying decision. The first is the real estate market. Speak with a real estate agent to see if now is the time to buy in your area; you could be looking at a time when prices are high and bound to drop. Check out the real estate costs in your area and surrounding areas to see if you can feasibly afford a home you love; if not, consult the job market in other cities where you would consider moving.
Finally, don't neglect to be financially savvy with a choice like this. Keep contributing to retirement accounts and balance your savings for a down payment with paying off other existing debt for the best outcome.
It's important to note that you'll have more money to put into each of these categories if you can keep more money away from the IRS. Do your taxes correctly, but get help from tax preparation services to take the highest legal deductions and tax credits you can. When that money stays in your pocket, you can do great things for your future.
Contact a law office like Hough & Co CPA for more information and assistance.