Many
of twentysomethings find it hard to handle their finances, especially those who
recently graduated from college. Oakmere Advisors finds it
important that each individual should learn how to properly budget their money
in order to avoid any problems when paying their loans and credit card bills.
After
conducting thorough reviews about the matter, Oakmere Advisors found
out that most of the young individuals today views money as a major source of
stress. But the good thing is that twentysomethings are more responsible with
their money than the Generation X nowadays.
There’s
a word that could sum up your 20s: INDEPENDENCE. It’s a stage in your life
where you have to further develop yourself and your capabilities. It is where
you should learn how to make money because you must practice paying your own
bills and manage cash flows. However, you might end up having terrible problems
if you don’t have a proper financial education.
If
you are one of those individuals that are on the verge of massive stress
because of their finances, you don’t have to worry anymore because Oakmere Advisors will
certainly help you to handle your finances easily and effortlessly with the
following helpful tips.
The
very first tip that Oakmere Advisors
wants you to consider is to use your 401(k) if you have some. Young people
don’t have sensible goals when it comes to their retirement these days. Most of them think that they will only spend
less than $30,000 a year in their old age. Remember that pensions are getting rarer
and Social Security payments are getting smaller, so you should give more
considerations about your retirement starting today. Oakmere Advisors suggests that you should save at least 4 percent
of your pretax income or 18 percent if you make more money in order to get about
85 percent of your working income when you retire. The specific amount that you
should save depends on your income and the lifestyle that you’re used to now.
If
your employer offers a 401(k) match program, you should contribute at least
enough to meet the match threshold. If you don’t have a 401(k), you could open
a Roth IRA or a myRA account. Do your best to save as much as you can. The
contributions for both accounts are usually automatically deducted from your
paycheck, so it’s easy to set it and forget it.
Oakmere Advisors second important tip is that you should
save even more! Most young individuals are too busy thinking about today that
they tend to forget about tomorrow, and saving money becomes an afterthought. You
need to have an emergency savings of at least 3-6 months of your expenses. Put
it in either a checking or a savings account so that you could easily withdraw
it if you need to. You should also start saving for your retirement because you
could end up $500,000 richer by the time you retire.
Third
tip is to monitor your spending. Reviews made by Oakmere Advisors say that mobile apps are actually helpful when it
comes to your finances because they could aid you in assessing your spending and
start saving. They could also help you put your finances in writing and even
send you alerts if your purchases are bigger than usual.
“Take into account the costs of grad school”, Oakmere Advisors says in its fourth
tip. It is important to track your budget before enrolling. Run the numbers, and
see if a two-year program could be just as good as a four-year one, or if you
should save money for a couple of years before returning to school.
Are
you used to rent a new car? Buy a used car instead, according to the Oakmere Advisors fifth tip. It makes more
sense to buy a cheaper used car because your monthly payment is just the same
as leasing a car. If you buy a car, you could sell it to acquire a little money
if you’re planning to move to other place, but if you just lease it, you’ve
basically thrown the money away. Buy a used version of your dream ride, even if
it’s only a few years old because you’ll save a lot of money.
Start
developing credit, this sixth tip might be a big NO to others, but Oakmere Advisors also sees it as a good
thing. You should get one now to boost your credit history. If you suddenly
want a mortgage or a car loan, credit cards might come handy because both require
a good credit score. If you don’t qualify for a credit card, try a secured
credit card that could help you boost credit if you put down a security deposit
first. Just make sure to set up an automatic payment with your credit card to
pay off the balance in full each month.
Seventh
tip is to invest in the stock market. Keep your money in a savings or checking
account if you need it over the next two years, but if you won’t need it for the
next two to five years, invest in bonds. And if you don’t need it for more than
five years, invest in stocks, regardless how small the amount. But don’t jump into
the stock market unless you’re already putting enough money into your 401(k).
And
Oakmere Advisors last tip goes like
this: make the most of your taxes! We all know that taxes are really, really complicated,
but if you get a handle on your deductions now, it could be easier for later. Sign
up for a Health Savings Account (HSA) once your employer offers it. Your salary
could be considered slightly lower income tax time, which could save you money
because this account lets you contribute pre-tax dollars. Then, the money increases
in your account (also tax free), and you could withdraw that money tax-free. A
Flexible Spending Account (FSA) does similar things, but with restrictions,
such as spending limits and no rollover from year to year. You are also eligible
for tax deductions if you're in school, paying off student loans, own a home,
or fall below a certain income threshold. The IRS has a comprehensive list of
tax deductions on its website, and you should take the time to look it over
before crunch time in April.
