Monday, May 23, 2022

5 Investments to Make in Your 20s That Will Pay Off Later

Student Loans

When you’re in school and getting your first loan for school, it’s tempting to spend money on fun activities that you really don’t need. The problem with that is that you could be in a lot of debt by the time you’re out of school, not only because of how much you owe, but how much interest you have to pay on it.

While you’re getting your first loan for school, you’ll most likely pay more per month than most people do for rent and other expenses. If you’re close to graduating or thinking about going back to school in the future, consider some of these financial steps that you can make now that will come in handy later on.

The first step to building a good credit score is to start using credit cards to make a larger down payment on your car.

Emergency Fund

College will be expensive, so in order to save money and pay for tuition, we’ll all have to set aside some money for the future. It could be something as simple as paying a few hundred dollars for the year, or it could be a couple thousand dollars per semester. Some parents save $1000 per year for college savings. You can also talk to your parents about contributing to your college savings.

Pick a safe investment company or fund, such as a 529 plan. They’ll allow you to put in just a small amount that grows tax-free, and you won’t have to pay any of the taxes when you withdraw the money when you need it. You’ll also have access to the money when you’re done with college.

Retirement Savings

With a proper budget in place and savings plans, you can have enough saved to live comfortably in your 60s. The age for which you should reach retirement varies across the globe, but for those working in high-pressure jobs, it could be in the 70s.

For those just beginning work, retirement will be easier. There are several simple ways to save without affecting your lifestyle. These tips will help you save enough for your golden years, and many of them are budget-friendly.

There’s not as much money to put away in a 401k, but if you save enough for retirement, you can invest the rest and build a secure future for yourself.

Invest in Yourself

Many of us make the mistake of investing our money in assets that do not yield anything, like stocks and real estate.

Instead, start by putting aside money for travel. Research the best international destinations and consider other adventures as well.

Start a Side Hustle

Consider starting a side hustle to create additional income. Think about what you enjoy, and then invest in that side of your life.

Create a Solid Financial Plan

Start by setting up a budget. Next, create a financial plan to help you stay on track. You can use tools like Rocket Lawyer, which will give you helpful information on what to look for when you are getting sued and how to protect your assets.

Take Time Off to Travel

Business Insider’s Lindsay Stein recently wrote about how to reclaim your 20s and figure out what it is you want to do. This was based off her question to her younger sister, who recently left her job in finance to travel the world for a year.

As a younger person, you don’t need to know what you’ll do with your life, but it’s nice to know what your passion is. By taking time off and traveling before it’s too late, you can figure out exactly what makes you happy and dedicate yourself to pursuing it.

Learn New Skills

Don’t limit yourself to a traditional education: There are so many incredible opportunities for investing in yourself that exist, even without any college or advanced degrees. For example, internships, freelance work, coding workshops, coding bootcamps, and tech conferences offer opportunities to learn and teach yourself new skills. Think of what would be a fun or interesting way to get better at something—maybe you could invest in one, or you could go on two or three of them and work your way up. If you’re really dedicated, you could even invest in one thing at a time, one a month.

At the very least, learning a new skill will be a fun hobby, and you’ll learn important lessons that apply to every area of your life, not just your career.

Invest in Your Career

You’re no longer at the bottom of the totem pole—you’re somewhere higher up. But make sure you’re investing in your career so you can advance. You don’t want to have to deal with that “mid-life crisis” of having a two-year gap where you’re stuck in a dead-end job.

At the end of the day, it’s up to you to make your career dreams happen. Invest in classes or workshops at your local community college. Earn a certification for something that’s meaningful to you. I took welding classes and certified as a master welder for non-destructive testing. I was even able to travel and work with other steel fabricators while I was doing this training. You never know when a skill you learn will come in handy, so make sure you invest in yourself.

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